A.P. MOLLER HOLDING - ANNUAL REPORT 2017 by apmollerholding

A.P. MØLLER HOLDING A/S ANNUAL ∙ REPORT 2017

Esplanaden 50 DK - 1263 Copenhagen K

apmoller.com CVR 25 67 92 88

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

AT A GLANCE As the investment arm of the A.P. Møller Foundation, our purpose is to exercise the Foundation’s role as an engaged owner in the spirit of A.P. Møller and to ensure that the Foundation can continue to contribute to society in the form of donations for generations to come. We fulfil this purpose by safeguarding the long-term viability of our companies and by investing in and building value creating businesses that have a positive impact on society and on our name.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

CONTENTS

Management review................................. 4 Letter from the CEO ................................................................................................... 5 Our strategic beliefs ................................................................................................... 7 Financial performance ............................................................................................... 9 A.P. Møller – Mærsk A/S .......................................................................................... 11 Maersk Tankers A/S .................................................................................................. 13 A.P. Møller Capital P/S ............................................................................................. 15 Danske Bank A/S ...................................................................................................... 16 Board of Directors .................................................................................................... 18 Executive Board ........................................................................................................ 18 Risk management..................................................................................................... 19 Corporate Social Responsibility ............................................................................. 20

Financial statements ............................. 21 Consolidated financial statements ........................................................................ 22 Parent company financial statements .................................................................. 78

Reports...................................................... 88 Management’s Statement ....................................................................................... 89 Independent Auditor’s Report ............................................................................... 90

2016 comparable numbers in brackets

A.P. MØLLER HOLDING A/S ANNUAL ∙ REPORT 2017

MANAGEMENT REVIEW

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

LETTER FROM THE CEO

We tend to describe the journey of A.P. Moller Holding as having three phases: capturing where we are coming from, our current status, and where we are going. The first phase of A.P. Moller Holding’s journey was initiated by A.P. Moller Holding’s acquisition of shares in Danske Bank in 2015 to secure our ownership of 20% in what has now become the second largest bank in the Nordic region (measured by market capitalisation). At the time, A.P. Moller Holding had no liquid funds, so the acquisition of Danske Bank shares was funded by an external loan of DKK 10bn. During 2017, two years earlier than projected, we managed to pay back this loan. The investment in Danske Bank shares has not only proven to yield an attractive return for A.P. Moller Holding, but it has also created a strong foundation and cash flow profile to safeguard our future activities. We appreciate the bold decision taken by A.P. Moller Holding’s Board to acquire the Danske Bank shares, even if we did not have “cash in hand” at the time, and we are grateful to the team of Danske Bank for their performance over the past years.

DEAR READER

OUR JOURNEY: PAST, PRESENT AND FUTURE

As A.P. Moller Holding’s activities have rapidly expanded during 2017, we are pleased to present a more detailed report of our annual accounts.

A.P. Moller Holding was founded at the end of 2013, as the controlling owner of A.P. Moller – Maersk and the investment arm of the A.P. Moller Foundation. For a company, not even five years old, and with a management recruited in 2016 onwards, A.P. Moller Holding is in many ways similar to a start-up, not least in relation to our older parent (the A.P. Moller Foundation) and daughter (A.P. Moller – Maersk).

Mærsk Mc-Kinney Møller often stressed the importance of the principle KISS1, to keep matters concise and simple. I hope that my CEO letter, to complement the more detailed annual report, offers a straightforward explanation of not just our results, but also our direction.

The second phase of our journey has been focused on supporting A.P. Moller – Maersk in its transformation strategy and simplification of its structure. In this respect, during 2017, A.P. Moller Holding was approached about the possibility to acquire Maersk Tankers. In cooperation with Mitsui & Co. Ltd., we acquired Maersk Tankers in September 2017. Mitsui brings vast experience in shipping and a deep bench of relationships from the energy markets. We have known Mitsui for a long time through different activities in our affiliates and feel honoured that they wanted a partnership with A.P. Moller Holding. Their co-investment also meant that A.P. Moller

Holding’s capital exposure to the product tanker segment did not change significantly - previously we were already exposed to the industry through our ownership in A.P. Moller – Maersk. Now we are exposed to it directly, but in capital terms the difference is fairly marginal. Maersk Tankers operates in a very challenged industry, dependent on the demand for petroleum products, but with a team offering a compelling vision to digitalise parts of the tramp shipping industry. The CEO of Maersk Tankers recently shared a copy with me of Michael Porter’s Harvard Business Case of the tanker industry from 1983. It is a fascinating read, because the industry’s business model and mechanics have stayed largely the same over almost forty years. While we do not expect the product tanker industry to improve shorter term, we believe there is plenty to do to improve Maersk Tanker’s position. In this respect, I am grateful to the Maersk Tankers team for carrying out a swift ownership transition, without missing a beat in executing their strategic plans for 2018. A.P. Moller – Maersk’s transformation is still ongoing almost two years after its announcement to change the structure. This is no surprise given the magnitude of the changes. As we see it, the intended separation of the Energy businesses was justified and required in order to drive agility and establish more focused companies, whereby the Board and Management had more time to go in depth on pressing strategic topics. We are pleased to see the progress made and that good solutions, with strong industrial logic, have been found for Maersk Oil and Maersk Tankers.

“Keep it simple, stupid” or the more polite “keep it simple and straightforward”

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

A.P. Moller – Maersk is facing profound industry challenges on several fronts. From our vantage point, the company’s twofold strategy for its transport & logistics businesses, to improve the underlying performance, while at the same time embrace digital disruption and pursue new opportunities, is no easy feat but warranted. As the former Board member Sir John Bond told his fellow A.P. Moller – Maersk Board colleagues a few years back: “The life expectancy of a corporation is shorter than a human being”. Standing still is not an option, and never has been. At the same time, we appreciate the importance of keeping a long-term view of new initiatives and not falling in the trap of the quarterly reporting cycle. It takes time to turn around a supertanker and build new businesses! The third phase of A.P. Moller Holding’s journey is the development of our future portfolio, to complement our ownership in A.P. Moller – Maersk and Danske Bank. In August 2017, a year after A.P. Moller Holding recruited its current management, we laid the foundation for our first new business venture, A.P. Moller Capital. A.P. Moller Capital is the fund manager for the Africa Infrastructure Fund (AIF), and they see great opportunities to invest in essential infrastructure in Africa. We believe that the A.P. Moller Capital team holds relevant experience, capabilities and relationships to manage the not insignificant and prevalent ESG2 and financial risks of infrastructure investments in emerging markets, not least on the African continent. The fund aspires to not just deliver a satisfactory return, but also to be part of supporting the economic development in a region, facing some profound challenges, including a faster

growing population than anywhere else in the world (Africa’s population is expected to more than double in the next thirty years). The interest in AIF has been quite overwhelming and we are thankful to our partners PensionDanmark, PKA, PFA and Lægernes Pension, for their support as anchor investors. AIF is well on track to secure its funding target, making it a sizeable “first time” fund and a leading infrastructure investor in Africa.

OUR FINANCIAL PERFORMANCE The management of A.P. Moller Holding keeps a close eye on three financial indicators, which we believe are important when assessing our performance. Firstly, we have an obligation towards our shareholder and affiliates to ensure we have a strong balance sheet with a debt level, which is manageable, also in times of crisis. Secondly, we pay close attention to our actual cash flows. Thirdly, over time, we would like to see our net asset value increase, preferably faster than relevant benchmarks. A.P. Moller Holding ended 2017 with a strengthened balance sheet and the loan assumed at the time of acquiring Danske Bank shares fully paid back, as a result of a continued satisfactory cash in-flow of approximately DKK 5.4bn, through dividends and a share buy-back programme.

The result of the year enabled A.P. Moller Holding to pay the A.P. Moller Foundation dividends of DKK 500m, which will go back to society in the form of donations. Over the past five years, the Foundation has received dividends from A.P. Moller Holding to the tune of DKK 4bn, enabling projects like the research facility Maersk Tower, the construction of the new Copenhagen International School, and the popular bridge connecting Christianshavn with Nyhavn (“Inderhavnsbroen”). It is a reminder of the generous and impactful gift of A.P. Møller, when he donated a large part of his family fortune to establish the A.P. Moller Foundation, with the blessing of his wife and children. During 2017, A.P. Moller Holding’s net asset value grew to DKK 136bn up from DKK 134bn in 2016. Since 2013, our net asset value has increased by DKK 31bn (30%). This is slightly short of MSCI World Index, but given our portfolio’s significant exposure to the challenged energy and shipping markets, it is still a reasonable performance.

Environmental, Social and Governance

Danske Bank delivered a strong result driven by the continued improvements of the Nordic economies, in combination with a strong relative performance compared to its Nordic peers. Danske Bank’s anti-money laundering case is a concern and we are confident that the right measures will be taken, based on the findings of the independent investigation. The mixed performance highlights the importance of maintaining a diversified portfolio. We will in the coming years continue to improve our portfolio composition, albeit recognising that A.P. Moller – Maersk and Danske Bank will hold a significant share of our total portfolio for the foreseeable future.

For 2017 alone, the increase in net asset value was driven by the acquisition of Maersk Tankers and the positive development of Danske Bank (net DKK 3.1bn) offset by the value depreciation of A.P. Moller - Maersk (DKK -3.6bn). A.P. Moller – Maersk experienced a challenging year with shipping and energy markets under continued pressure. The impairments in the Performance development (Indexed, 2013 as base year) Our Net Asset Value MSCI World Index SCFI Index Brent oil price (per BBL)

portfolio reflected the low oil price environment. The challenges were further accentuated by a cyber-attack that had an adverse impact on several of the container related activities.

Growth rate 2014

2015

2016

2017

(2014-17)

9.5%

-7.4%

26.1%

1.6%

16.1% -5.8%

8.0% -19.0%

10.4% 10.3%

9.1% -11.4%

9% -7%

-42.2%

-16.1%

24.1%

2.3%

-9%

Source: Bloomberg. Values have been based on DKK using average exchange rate for the year.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

WHAT IS NEXT IN 2018? The third phase of our company’s journey, the development of our future portfolio, is only in its infancy. As the Greek philosopher Socrates said, “the unexamined life is not worth living”. This certainly applies to our company’s raison d'être and future. As we strengthen our investment team, including the recruitment of a Chief Investment Officer, we will in the coming year review our strategy for large investments. In such quest, we are guided by A.P. Moller’s legacy. The English translation of the deed of the A.P. Moller Foundation states “… the companies should stay well consolidated, so that the primary focus is not about distributing big dividends, but building companies having a positive impact (“at opbygge nyttig virksomhed”). “At opbygge nyttig virksomhed” is at the very heart of A.P. Moller Holding’s ownership and investment strategy. As a concluding remark, let me as CEO extend my gratitude to our team in A.P. Moller Holding for their significant efforts and contributions in the past year.

OUR STRATEGIC BELIEFS

A.P. Moller Holding is an owner and investor in the spirit of our founder A.P. Møller; investing in and building new businesses that have a positive impact on society (“nyttig virksomhed”). A.P. Moller Holding is the cultural custodian of the A.P. Moller and Maersk name and values. A.P. Moller Holding is an engaged long-term owner with a point of view on key matters. A.P. Moller Holding seeks portfolio renewal to safeguard the long-term viability of its portfolio. We believe portfolio renewal comes from building new businesses inside and outside of our core holdings. A.P. Moller Holding is open to reconsider ownership of a business, if its business model does not have a positive impact on society, and/or lacks prospects for competitive value creation over time. A.P. Moller Holding’s ownership in A.P. Moller – Maersk is to be diluted nor divested. A.P. Moller Holding aspires to hold a diversified and financially robust portfolio to sustain black swans and unforeseen negative events.

ROBERT M. UGGLA

A.P. Moller Holding pays dividends to the A.P. Moller Foundation, in order for

CEO

the Foundation to contribute to and support society in the form of donations.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Five-year summary for A.P. Møller Holding A/S1 Amounts in DKKm

HIGHLIGHTS

2017

2016

2015

2014

2013

209,819

189,288

209,742

202,109

199,642

4,863 5,939

3,853 6,940

3,363 23,373

2,315 31,446

1,660 21,832

- 4,214 - 2,991

- 4,332 - 8,366

- 3,089 11,962

- 4,000 41,006

- 3,573 27,495

1,388

- 1,349

3,466

11,754

8,045

78,127

78,613

79,357

80,209

79,909

BALANCE SHEET Total assets

435,298

464,366

458,279

425,174

403,796

Equity at 31 December

229,502

256,376

267,107

262,203

230,607

18,873 - 39,025

11,170 - 11,068

30,619 - 13,685

45,750 - 9,150

25,591 - 8,945

INCOME STATEMENT Revenue Share of profit in associated companies Profit/loss before financial items (EBIT) Financial items, net Profit/loss for the year A.P. Møller Holding A/S' share of profit/loss Average number of employees

CASH FLOW STATEMENT Cash flow from operating activities Cash flow used for capital expenditure FINANCIAL RATIOS Return on equity

-1.2%

-3.2%

4.5%

16.6%

23.8%

Equity ratio

52.7%

55.2%

58.3%

61.7%

57.1%

Consolidated. Key figures have been adjusted for discontinued operations (energy businesses of A.P. Moller – Maersk).

Expanded the A.P. Moller Holding organisation to establish relevant finance, accounting, tax and investment capabilities to fulfil its duties as parent company to A.P. Moller – Maersk, Maersk Tankers and A.P. Moller Capital, as well as being a large owner of Danske Bank and a manager of a portfolio of other financial assets.

A.P. Moller – Maersk continued progressing their transformation from a conglomerate to a focused global container integrator. During the year A.P. Moller – Maersk has completed five large-scale M&A transactions. All these transactions support the strategic ambition of becoming an integrated transport and logistics company.

Danske Bank continued to deliver a strong financial result, reflecting stable development in the Nordic economies and the continued progress on the strategic initiatives aimed at creating a simpler and more customer-centric bank.

Acquired Maersk Tankers from A.P. Moller – Maersk for USD 1.2bn plus an earn-out. A.P. Moller Holding has sold part of the vessel owning entity to Mitsui. The intention is to develop a digital shipping platform within Maersk Tankers.

Established the fund management company A.P. Moller Capital and raised USD 650m in a first closing for the Africa Infrastructure Fund. The fund has now raised USD 865m close to the funding target.

Acquired the property at Esplanaden 19 and following renovation A.P. Moller Holding will move into the new office expected medio 2019. 8

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

FINANCIAL PERFORMANCE

correlation with the share price development of A.P. Moller – Maersk and Danske Bank.

NET ASSET VALUE (DKKm) 104,698

114,653

106,871

2013

2014

2015

134,229

135,857

2016

2017

OPERATING ACTIVITIES

A.P. Moller Holding’s net asset value grew to DKK 136bn (DKK 134bn). The cash flow from our investments was DKK 5.4bn, which we find acceptable in light of the challenging shipping and energy markets

Revenue for 2017 grew with 11% to DKK 210bn (DKK 189bn) in line with the topline growth in A.P. Moller – Maersk. Total income in Danske Bank increased by 5%.

CASH INFLOW (DIVIDENDS AND SHARE BUY-BACK) TOTAL COSTS

(DKKm)

Operating costs increased by 9% reflecting the development in A.P. Moller – Maersk and mainly related to higher activity level and increased bunker costs.

17,600

4,200

6,422

5,411

2016

2017

A.P. Moller Holding’s administrative costs have increased due to the increased activity level. At the end of 2017, our organisation counted eighteen employees up from five a year before. Recruitment of the investment team and supporting functions will continue in 2018.

2013

2014

2015

NEW DIRECT INVESTMENTS1 (DKKm) 36,664

EBIT 2017 was a transformational year for A.P. Møller Holding A/S, as it marked the first full year as an active parent company of three businesses, and with initial steps taken to establish in-house resources and systems to manage our portfolio risks, liquidity and investments. During the year we acquired Maersk Tankers from A.P. Moller – Maersk. We further established A.P. Moller Capital which launched its first infrastructure fund. A.P. Moller Holding’s financial result was negatively impacted by A.P. Moller – Maersk’s low but improving financial result and positively impacted by a strong financial performance by Danske

Bank, demonstrating the benefit of a diversified investment portfolio. Other financial investments only had a minor impact on the 2017 result. The increases in revenue, operating profit and earnings reflect an improvement in the underlying performance in most businesses of our portfolio.

EBIT for 2017 amounted to DKK 5.9bn down from DKK 6.9bn. Our result before interest and tax was negatively impacted by the significant impairments made in A.P. Moller – Maersk in connection with reclassifying the Energy businesses to “discontinued businesses”.

2013

PROFIT FOR THE YEAR Our net asset value increased during the year by DKK 2bn to DKK 136bn. This is the highest value since the establishment of A.P. Moller Holding in 2013. The measure is volatile, not least over a shorter period, given our portfolio’s strong

8,058

2014

2015

2016

2017

2015 relates to acquisition of Danske Bank and 2017

relates to acquisition of Maersk Tankers

Profit improved, yet still negative, to DKK –3.0bn from DKK –8.4bn last year. A.P. Moller Holding’s share of the profit ended at DKK 1.4bn, a DKK 2.7bn improvement since 2016.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

The total capital inflow from dividends and share buy-back programmes was DKK 5.4bn.

TAX Tax for the year amounted to DKK 1.5bn compared to DKK 1.1bn in 2016. The corporate tax rate is affected by the allocation of net profit before tax between tonnage tax activities and other activities for the entities within the joint taxation.

NET ASSET VALUE The net asset value increased by DKK 2bn to DKK 136bn in 2017. The increase reflects mainly the total return development in A.P. Moller – Maersk and Danske bank during the year.

INVESTMENT ACTIVITY In 2017, A.P. Moller Holding built up in-house capabilities to manage the financial investment portfolio. The return from A.P. Moller Holding’s financial investment portfolio was 5.6% reflecting the general strong global financial markets.

DKKm Entity

Value

Change in 2017

A.P. Moller - Maersk

93.3

-3.6

Danske Bank Maersk Tankers

43.2 2.9

3.1 2.9

-3.5 135.9

-0.7 1.7

Other net assets Total

CASH FLOW Cash flow for A.P. Moller Holding’s investment activities is summarised in the table below. Cash flow used for investing activities was DKK 3.5bn in 2017 and relates primarily to the acquisition of Maersk Tankers from A.P. Moller – Maersk. The transaction was partly debt financed. The debt was refinanced after Mitsui & Co. Ltd. acquired 30% of the shares in Maersk Product Tankers A/S on 6 April 2018.

The net asset value calculation is based on different valuation methods. A.P. Moller – Maersk and Danske Bank correspond to more than 95% of the portfolio based on the market capitalisation end of the year, whereas Maersk Tankers is based on third-party valuation of the fleet.

DIVIDEND Based on the financial result for 2017 we propose a dividend of DKK 500m to A.P. Møller og Hustru Chastine Mc-Kinney Møllers Fond til almene Formaal.

OUTLOOK A.P. Moller Holding’s portfolio is generally exposed to the global economic markets, hence the outlook for our financial performance in 2018 is subject to significant uncertainties. Subject to macroeconomic factors our performance mainly depends on the development of the commercial activities in A.P. Moller - Maersk and Danske Bank as well as the restructuring of the Energy businesses in A.P. Moller - Maersk. According to the Annual Report 2017 for A.P. Moller – Maersk, A.P. Moller - Maersk expects an underlying profit above 2017 (USD 356m) and earnings before interest, tax, depreciations and

amortization (EBITDA) in the range of USD 4-5bn (USD 3.5bn). According to the Annual Report 2017 for Danske Bank, Danske Bank expects a net profit in the range of DKK 18—20bn. Furthermore, our financial performance will be impacted by the development in Maersk Tankers, A.P. Moller Capital as well as the returns from our financial investments (and potential new investments during the year). We do not expect the impact on A.P. Moller Holding’s results from these companies to be material. This statement is based on the current expectations for the financial markets and are by nature subject to a number of uncertainties that could cause actual results and performance to differ materially from the expectations.

NET ASSET VALUE

CASH INFLOW

A.P. Moller - Maersk Danske Bank Amounts in DKKm

2017

2016

2015

2014

2013

Financial Investments

KEY FIGURES: A.P. Moller Holding's investment activities Cash flow from operating activities

2,886

1,523

- 303

-7

-1

Cash flow used for investing activities Cash flow from financing activities

- 3,495 1,304

909 - 2,858

- 28,184 27,785

- 842 0

- 678 0

135,857

134,229

106,871

114,653

104,698

500

1,000

Net asset value (market value) Dividend to A.P. Moller Foundation Average number of employees

2%1%

Maersk Tankers 24% 31% Net asset value DKK 136bn

Cash inflow DKK 5.4bn 66% 76%

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

A.P. MØLLER – MÆRSK A/S A.P. Moller – Maersk delivered a loss of USD 1.2bn (negative USD 1.9bn) and continues to execute on the strategy transforming the conglomerate to an integrated transport and logistics company

The Hamburg Süd acquisition closed on 30 November, and A.P. Moller – Maersk reiterated the expected synergies of USD 350—400m by 2019, on top of expected synergies from a closer collaboration between the integrated container and logistics businesses.

THE YEAR IN BRIEF Accelerated growth in the world economy supported fundamentals for the continuing business areas during 2017. However, this was not enough to offset capacity influx which rendered lower container freight rates during the second half of the year. Excluding Hamburg Süd, Maersk Line reported a revenue of USD 23.8bn (+15% YoY) and an underlying profit of USD 521m (loss of USD 384m), equal to an improvement of USD 905m. APM Terminals reported revenue of USD 4.1bn on a consolidated basis on par with 2016. The underlying profit was USD 414m (USD 433m). Cash flow from operating activities was USD 827m (USD 819m), resulting in a positive free cash flow of USD 155m (negative USD 730m).

ABOUT

STRATEGY REVIEW

A.P. Moller – Maersk was founded by A.P. Møller in 1904. The A.P. Moller Foundation has since its establishment in 1953 been the controlling shareholder in the entities which today make up A.P. Moller – Maersk.

Following the announcement in September 2016, A.P. Moller - Maersk made further progress on the execution of finding future solutions for the energy businesses while integrating and transforming the transport and logistics business.

The Foundation’s shareholding is held by A.P. Møller Holding A/S. A.P. Moller Holding holds 41.51% of the economic value and 51.23% of the voting rights in A.P. Møller – Mærsk A/S.

During the year, Maersk Oil was sold to Total, Maersk Tankers was sold to A.P. Moller Holding and the remaining part of the shares in Dansk Supermarked (19%) was sold to Salling Foundations.

REVENUE (USDm ) – CONTINUING BUSINESS 33,908

2013

34,806

2014

30,161

2015

27,266

2016

30,945

2017

EBITDA (USDm ) – CONTINUING BUSINESS 4,398

5,284

4,365

3,532 2,475

2013

2014

2015

2016

2017

UNDERLYING PROFIT (USDm) – CONTINUING BUSINESS

1,837

2,580 1,553 356 -496

Maersk Drilling and Maersk Supply Service have been classified as discontinued businesses and a solution for the future ownership is expected before end 2018.

2013

2014

2015

2016

2017

FREE CASH FLOW (USDm) – CONTINUING BUSINESS

In June 2017, A.P. Moller – Maersk businesses were interrupted by a cyber-attack which caused disruption in most business areas with a negative financial impact estimated at USD 250—300m.

1,992

2,635

2,415

-809 2013

2014

2015

2016

-3,591 2017

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Sadly, in 2017 there were seven fatalities while working at A.P. Moller – Maersk - owned facilities.

FINANCIALS A.P. Moller – Maersk reported a net profit of negative USD 1.2bn for 2017, driven by impairments in the discontinued businesses and APM Terminals. The underlying profit was USD 356m a USD 0.9bn improvement from 2016 mainly driven by an improvement in Maersk Line. The cash flow from operating activities was USD 2.6bn (up from USD 1.3bn in 2016), due to the improved underlying result, but negatively impacted by the increase in net working capital. The investment cash flow amounted to USD 6.2bn (USD 4.1bn above 2016) mainly related to the Hamburg Süd acquisition with a net cash impact of USD 4.2bn. A.P. Moller – Maersk proposes a dividend of DKK 150 per share.

EXECUTIVE BOARD • • • • •

Søren Skou (CEO) Claus V. Hemmingsen (Vice CEO) Vincent Clerc Morten Engelstoft Søren Toft

BOARD OF DIRECTORS • • • • • • • • • •

Jim Hageman Snabe (Chairman) Ane M. M. Uggla (Vice Chairman) Jan Leschly Arne Karlson Robert Routs Robert M. Uggla Dorothee Blessing Niels Bjørn Christiansen Thomas Lindegaard Madsen Jacob Sterling

HIGHLIGHTS During the year A.P. Moller – Maersk has completed five large-scale M&A transactions. All these transactions support the strategic ambition of becoming an integrated transport and logistics company. The acquisition of Hamburg Süd was announced in December 2016, the sale of Maersk Oil to Total announced in July 2017, the sale of Maersk Tankers to A.P. Moller Holding announced in September, the sale of the remaining shares in Dansk Supermarket and Egyptian Drilling Company announced during 2017. Following the cyber-attack in June, the ITorganisation has worked immensely on rebuilding the IT landscape in A.P. Moller – Maersk. Digitalisation is transforming the transport and logistics sectors. A.P. Moller – Maersk is working on fundamentally changing the shipping industry with the aim of improving and simplifying the shipping experiences with several initiatives. For example, A.P. Moller – Maersk and IBM announced their intent to establish a joint venture to provide more efficient and secure methods for conducting global trade using blockchain technology. During the year, Damco introduced a new digital freight-forwarding platform (Twill) that will simplify shipping processes for customers. The booking process is as easy as buying an airplane ticket, takes just 30 seconds, and allows the customer to track the shipment of their cargo.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

MAERSK TANKERS A/S Maersk Tankers delivered an unsatisfactory loss of USD 523m (USD 62m) due to challenging market conditions across most product tanker vessel segments

The use of algorithms in commercial decisionmaking enables the company to optimally position vessels where the customers need them the most and in markets that can yield the highest earnings. Through cost leadership, Maersk Tankers is reducing costs by creating higher efficiencies in systems and processes and improving procurement leverage.

STRATEGY REVIEW

Maersk Tankers is a leading company in the product tanker industry, transporting refined oil products globally. The company operates one of the largest fleets in the industry, comprising 164 vessels, of which 82 vessels are owned, and employs 2,300 people worldwide.

Established in 1928, Maersk Tankers has nine decades of experience and expertise in providing safe, reliable and flexible services to customers, which are oil majors and trading houses.

A.P. Moller Holding holds a 100% ownership stake in Maersk Tankers A/S. Maersk Tankers separated out its shipping assets into Maersk Product Tankers A/S during 2017.

1,625

2013

1,175

1,058

2014

2015

877

874

2016

2017

EBITDA (USDm) By commercially managing vessels, Maersk Tankers provides partners with the opportunity to increase earnings as well as flexible and transparent services while achieving scale and income for Maersk Tankers. The strategy is enabled by digitisation, combining algorithmic trading with commercial expertise to strengthen service offerings, generate new revenue streams and reduce costs. Maersk Tankers’ order book stands at nine MR product tanker vessels to be delivered in 2018—2019 as well as an optional order of 10 LR2s.

ABOUT

REVENUE (USDm)

271

297 199 89

2013

2014

2015

2016

2017

UNDERLYING PROFIT (USDm) 139

156 58

-47 -172 2013

2014

2015

2016

2017

FREE CASH FLOW (USDm) The fleet trades in five vessel segments: Intermediate, Handy, Medium-Range (MR), Long-Range 2 (LR2), and Aframax. Maersk Tankers’ strategy is to deliver industryleading commercial performance, cost leadership and be the preferred partner for vessel management.

971

882 106

-10 2013

2014

2015

2016

2017

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

THE YEAR IN BRIEF

EXECUTIVE LEADERSHIP

The fundamentals for the product tanker market across all vessel segments continued to be challenged in 2017.

• • • • • •

Maersk Tankers reported a revenue of USD 874m (USD 877m) and a negative underlying loss of USD 47m (profit of USD 58m). Maersk Tankers reported a total of six Lost Time Incidents (LTI) and a Lost Time Incident Frequency (LTIF) of 0.42. In September 2017, A.P. Moller Holding acquired Maersk Tankers for USD 1,171m in an all-cash transaction with the potential of a contingent consideration reflecting market developments in the coming two years. After the competition authority clearance in March 2018, Maersk Tankers A/S and Maersk Product Tankers A/S were separated and Mitsui & Co. Ltd. acquired 30% of the shares in Maersk Product Tankers A/S. The transaction closed on 6 April 2018.

Christian M. Ingerslev (CEO) Henrik K. Jakobsen (CFO) Claus Grønborg Tommy Thomassen Søren C. Meyer Prakash Thangachan

BOARD OF DIRECTORS • • • •

Robert M. Uggla (Chairman) Paul Reed (Vice Chairman) Martin Larsen Maria Pejter

HIGHLIGHTS Maersk Tankers entered into a strategic partnership with Boston-based hedge fund CargoMetrics to support their digital strategy. Maersk Tankers will, in a partnership with Norsepower, ETI and Shell, install and trial Flettner rotor sails onboard a Maersk Tankers operated LR2 vessel. This will be the first installation of wind-powered energy technology on a product tanker vessel and is estimated to reduce fuel consumption and associated CO2 emissions on typical shipping routes by 7—10%. The rotor sails will be fitted during 2018, before undergoing testing and data analysis at sea. Maersk Tankers took delivery of the first out of nine MR tanker vessels in their new building programme from Dalian yard in Q1 2018.

FINANCIALS Maersk Tankers reported a loss for the year of USD 523m and a ROIC of -32.3%. The result was negatively impacted by an impairment of USD 465m and by challenging market conditions, which was partly offset by improved commercial performance and efficiency improvements. Cash flow from operating activities was USD 23m (USD 178m). Net cash flow from capital expenditure was USD - 17m (USD 188m) driven by newbuilding instalments, partly offset by the sale of four vessels.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

A.P. MØLLER CAPITAL P/S

Africa. Our global mindset, long experience and local knowledge support the continued development in Africa.

EXECUTIVE LEADERSHIP • • • •

Kim Fejfer (Managing Partner) Lars Reno Jakobsen (Senior Partner) Joe N. Nielsen (Partner and CFO) Jens Tomassen (Partner)

THE YEAR IN BRIEF AND RECENT DEVELOPMENTS

A.P. Moller Capital successfully raised USD 865m in commitment to their first fund “Africa Infrastructure Fund 1”

The first close constitutes USD 650m in commitments from anchor investors PFA Pension, PKA, PensionDanmark, Lægernes Pension as well as A.P. Moller Holding.

BOARD OF DIRECTORS • • •

Robert M. Uggla (Chairman) Lars–Erik Brenøe Martin Larsen

In January 2018, A.P. Moller Capital announced its joint bid with CDC to acquire Copperbelt Energy Corporation, a Zambian publicly listed company. In March 2018, the Fund obtained second close with support from Danica and SEB bringing the total commitment to USD 865m, close to the target of USD 1bn in commitment. A.P. Moller Capital currently employs nineteen employees in their offices in Copenhagen and Dubai.

ABOUT A.P. Moller Capital was established in 2017 with A.P. Moller Holding as the largest shareholder with the purpose of managing stand-alone capital funds focusing on infrastructure investments in growth markets. A.P. Moller Capital is headquartered in Denmark and is regulated by the Danish Financial Supervisory Authority (FSA). In August 2017, A.P. Moller Capital launched its first fund, The Africa Infrastructure Fund 1 (AIF1). The fund aims to build and operate infrastructure projects in Africa, targeting projects within transportation and energy such as rail, roads, ports

and warehousing to power plants, transmission, pipelines and distribution.

FINANCIALS The fund has an initial target of ten to fifteen investments and an operational period of ten years.

STRATEGY REVIEW The investment thesis for AIF1 is strong. With the population estimated by experts to double by 2050, the need for new infrastructure in Africa is clear. The investments into infrastructure are critical to build a foundation for job creation and prosperity in Africa. Increasing exports and rising consumer demand will take a toll on infrastructure. A.P. Moller related companies have more than a century of history and engagement in

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

DANSKE BANK A/S

expectations and demands, increased competition and increased regulation. Danske Bank continues to focus on four strategic themes: •

Danske Bank delivered a strong financial result with net profit of DKK 20.9bn (DKK 19.9bn) and a return on shareholder’s equity of 13.6%, well ahead of management’s own target of return on shareholder’s equity of at least 12.5%

ABOUT Danske Bank is a Nordic universal bank with four core Nordic markets (Denmark, Norway, Sweden and Finland) and four business segments (personal, business, corporate and institutions and wealth). The universal banking model provides a strong diversified platform delivering synergies across core markets. A.P. Moller has been involved in Danske Bank since 1928 and in 2015, A.P. Moller Holding acquired a 20% direct ownership stake in Danske Bank.

During 2017, Moody’s upgraded Danske Bank’s credit baseline to a3 from baa1. S&P and Fitch maintained their rating.

•

Nordic potential Realising full Nordic potential to diversify business and strengthen footprint supported by growth strategy in Sweden and Norway. Digitalisation Digitalisation offers opportunities to deliver on the strategy of becoming a more customer-driven, simple and efficient bank. Customer experience The customer promise and ambitions frame the experiences Danske Bank wants to deliver in creating a leading customer experience. People and culture Ensuring a high performing, agile organisation to match the increasing customer expectations remains a key priority.

REVENUE (DKKm) 39,740

2013

45,330

45,611

47,959

48,149

2014

2015

2016

2017

19,858

20,900

2016

2017

NET PROFIT (DKKm)

13,123 7,115

2013

3.948 2014

2015

CET1 CAPITAL RATIO (%)

THE YEAR IN BRIEF

14.7%

15.1%

Danske Bank continued to successfully develop the partnership strategy in Norway and Sweden which has boosted its presence in the personal and business banking segments utilizing the potential as a challenger to the leading banks in the local markets.

2013

2014

16.1%

2015

17.6% 16.3%

2016

2017

4.2%

4.1%

2016

2017

DIVIDEND YIELD (%)

STRATEGY REVIEW Danske Bank’s vision is to become the most trusted financial partner by creating long-term value for all their stakeholders.

4.3% 3.3% 1.6%

Danske Bank is focused on reacting to the rapid changes which the financial industry is currently undertaking, due to low interest rate environment, digitalization, changed customer

2013

2014

2015

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

As a result of driving a customer-centric agenda Danske Bank maintained its strong position in terms of customer satisfaction during 2017. Another critical focus area for Danske Bank is compliance. Danske Bank continues to strengthen their compliance functions across the bank and will continue to make substantial investments to prevent criminals from abusing their platforms to commit financial crimes. During 2017, serious questions were raised regarding Danske Bank’s compliance functions especially regarding events that took place in Danske Bank’s Estonia branch which indicates that the branch has been used for money laundering. We note that both the management and Board of Directors take this very seriously and have initiated a thorough investigation. We support Danske Bank’s continued focus on improving the compliance function and to participate in the fight against financial crime.

FINANCIALS Danske bank delivered a strong financial result in 2017 with net profit of DKK 20.9bn and a return on shareholder’s equity of 13.6%, well ahead of management’s own target of return on shareholder’s equity of at least 12.5% at latest in 2018.

EXECUTIVE LEADERSHIP • • • • • • • •

Thomas Borgen Jakob Aarup-Andersen Tonny Thierry Andersen James Ditmore Carsten Egeriis Lars Mørch Jesper Nielsen Glenn Soderstrom

BOARD OF DIRECTORS • • • • • • • • • • • •

Ole Andersen (Chairman) Ingrid Bonde Lars-Erik Brenøe Jørn P. Jensen Jens Due Olsen Rolv Erik Ryssdal Carol Sergeant Hilde Merete Tonne Kirsten Ebbe Brich Charlotte Hoffmann Bente Bang Thorbjørn Lundholm Dahl

HIGHLIGHTS Danske Bank has successfully launched a partnership strategy in Norway and Sweden which has boosted its presence in the personal and business banking segments utilizing the potential as a challenger to the leading banks in the local markets. Close to 50% of Danske Bank’s lending book today is outside Denmark. Digitalisation continues to transform the financial sector driven by customer expectations and new regulation. Across the Nordic region Danske focuses on being a front-runner in digitalisation, as Danske Bank sees digitalisation of end-toend processes as an opportunity to become a customer-driven, simple and efficient bank. Often these new digital solutions are created in partnerships like MobilePay and GateTu (a partnership with A.P. Moller – Maersk) established to develop new business-to-business solutions and services.

Danske Bank’s CET1 capital ratio is end of 2017 17.6% well above the management target of 14—15% and the regulatory requirement of 12%. Based on the strong balance sheet Danske Bank proposed a DKK 10 per share dividend and a share buy-back programme to the tune of DKK 10bn (approx. USD 1.6bn).

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

BOARD OF DIRECTORS

JAN LESCHLY Member of the Board of Directors A.P. Møller – Mærsk A/S Vaxart Biosciences Inc. Universal Tennis Ranking LLC Other management duties Adjunct Professor at Copenhagen Business School

LARS-ERIK BRENØE Chairman, the Board of Directors Navigare Capital Partners A/S Member of the Board of Directors Danske Bank A/S The Danish Committee on Foundation Governance (Vice Chairman) The Confederation of Danish Industry (Vice Chairman of the counsil) A.P. Møller og Hustru Chastine Mc-Kinney Møllers Fond til almene Formaal A.P. Møller og Hustru Chastine Mc-Kinney Møllers Familiefond APMH Invest A/S A.P. Møller Capital GP ApS A.P. Møller Capital P/S Maersk Broker K/S (and Chairman of four affiliated undertakings) LINDØ port of Odense A/S From left: Martin Larsen, Peter Straarup, Robert M. Uggla, Lars-Erik Brenøe, Jan Leschly, Ane M. M. Uggla (Chairman)

PETER STRAARUP ANE M. M. UGGLA Chairman, the Board of Directors A.P. Møller og Hustru Chastine Mc-Kinney Møllers Fond til almene Formaal Den A.P. Møllerske Støttefond Maersk Broker A/S Maersk Broker K/S

Member of the Board of Directors A.P. Møller - Mærsk A/S (Vice Chairman) Other management duties Estemco III ApS (CEO) Timer ApS (CEO)

Member of the Board of Directors A.P. Møller og Hustru Chastine Mc-Kinney Møllers Fond til almene Formaal (Vice Chairman) Knud Højgaards Fond Højgaard Ejendomme A/S Ejendomsaktieselskabet Knud Højgaards Hus Oticon Fonden William Demant Invest A/S

EXECUTIVE BOARD ROBERT M. UGGLA CEO Member of the Board of Directors A.P. Møller – Mærsk A/S A.P. Møller Capital P/S (Chairman) Foundation Board of IMD Robert M. Uggla is actively involved in the management of four entities fully owned by A.P. Møller Holding A/S Other management duties Agata ApS Estemco XII ApS

MARTIN LARSEN CFO Member of the Board of Directors A.P. Møller Capital P/S Navigare Capital Partners A/S Assuranceforeningen SKULD (Gjensidig) Martin Larsen is actively involved in the management of five entities fully owned by A.P. Møller Holding A/S

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

RISK MANAGEMENT Our risk management setup allows us to safeguard the long-term viability of our portfolio companies by understanding the inherent risks associated with each investment and to support the companies in managing these risks in a changing environment RISKS RELATED TO OUR HOLDINGS A.P. Møller Holding A/S’s investments consist of Our Large Investments, Our Fund Manager and Our Financial Investments. Risks regarding Our Large Investments and Our Fund Manager include business and financial risks associated with the operation and performance of our holdings. Such risks are most effectively managed de-centrally. Consequently, the management of the individual holdings in affiliates define their own risk management policies and procedures.

respond appropriately to changing environments. Portfolio performance reports are prepared for the Board of Directors. A.P. Moller Holding also has a portfolio of fixed income and equities, managed by its own investment team. The overall objective of the portfolio is to create economic value in line with our values and ensures that a part of our portfolio remains ultra-liquid. The Board of Directors defines the investment policy. We manage the market, credit and currency risks related to our portfolio investments by limiting maximum exposure to individual asset classes and underlying assets. Derivative financial instruments such as currency and interest swaps are used for risk management purposes. The guidelines are reviewed regularly to ensure it reflects the market situation, and our financial situation at any given time.

As owner and a member of the Board of Directors of each affiliate, we monitor business performance in the affiliates closely, and reports on business and risk-related issues are appropriately provided to our Board of Directors. The ambition of A.P. Moller Holding is to hold a diversified and financially robust portfolio to sustain black swans and unforeseen negative events. Hence, risks are consolidated and monitored centrally in A.P. Moller Holding. Risk reporting is an integrated part of our business processes allowing A.P. Moller Holding to

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

CORPORATE SOCIAL RESPONSIBILITY “At opbygge nyttig virksomhed”, as stated in the deed of the A.P. Moller Foundation, is at the very heart of A.P. Moller Holding’s ownership and investment strategy. We are guided by our five core values

STATUTORY REPORT CF. SECTION 99A OF THE DANISH FINANCIAL STATEMENTS ACT As an international investment company with a broad range of investment activities, A.P. Moller Holding has a significant influence on society. We acknowledge the responsibilities that this entails and make an effort to ensure that we are recognised as a trustworthy group of companies. The Board of Directors of each of our Large Investments, A.P. Møller - Mærsk A/S, Danske Bank A/S and Maersk Tankers A/S and our Fund Manager, A.P. Møller Capital P/S define their own specific CSR policies and codes of conduct. We are represented on each board, and these representatives ensure that CSR policies, including human rights, climate change and environmental impact, are enforced. Policies are adapted to meet the circumstances in which each of the affiliates operates.

A.P. Moller Holding has not set a group target for the underrepresented gender but has ensured that all subsidiaries which fall under the requirements as reporting class large C or D have set targets for their supreme management body individually. Furthermore, our subsidiaries report on their individual target in their annual report, as well as for their individual policies concerning gender balance at the other management levels, if applicable. Please refer to the annual reports of A.P. Møller - Mærsk A/S and Maersk Tankers A/S.

GOVERNMENT PAYMENTS CF. SECTION 99C OF THE DANISH FINANCIAL STATEMENTS ACT Disclosure of tax payments on a country-by-country basis for 2017 in accordance with the EU Accounting Directive and as implemented in the Danish Financial Statements Act is provided in a separate report, A.P. Møller – Mærsk A/S Payments to Governments 2017. The report is available on: http://investor.maersk.com/financials.cfm

STATUTORY REPORT CF. SECTION 99B OF THE DANISH FINANCIAL STATEMENTS ACT A.P. Moller Holding is an investor in the spirit of our founder A.P. Møller; investing in and building new businesses that have a positive impact on society (“nyttig virksomhed”). We are guided by our five core values that were established by A.P. Møller and Mærsk Mc-Kinney Møller, and that are still championed by the future generations’ family members:

CONSTANT CARE ∙ Take care of today, actively prepare for tomorrow.

The Board of Directors counts one woman and three men. This constitutes gender balance in accordance with the guidelines issued by The Danish Business Authority in March 2016.

HUMBLENESS ∙ Listen, learn, share, give space to others. LEARN MORE ABOUT CSR IN A.P. MØLLER HOLDING UPRIGHTNESS ∙ Our word is our bond. OUR EMPLOYEES ∙ The right environment for the right people. OUR NAME ∙ The sum of our values and passion for Maersk.

For more information about A.P. Møller Mærsk A/S approach to CSR and A.P. Møller Capital P/S approach to ESG, please visit their websites.

For A.P. Moller Holding’s statutory statement on CSR in accordance with section 99A of the Danish financial statements act, please refer to http://www.apmoller.com/ wp-content/uploads/2018/05/CSR

A.P. MØLLER HOLDING A/S ANNUAL ∙ REPORT 2017

FINANCIAL STATEMENTS

Consolidated financial statements | Parent company financial statements | Management’s statement | Independent auditor’s report

A.P. MØLLER HOLDING A/S ANNUAL ∙ REPORT 2017 2017

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED FINANCIAL

STATEMENTS

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

FINANCIAL STATEMENTS

CONTENTS

Consolidated financial statements ........................... 22 Consolidated income statement for 1 January to 31 December ............................................................. 24 Consolidated statement of comprehensive income .................................................................................. 24 Consolidated balance sheet at 31 December.............................................................................................. 25 Consolidated cash flow statement ................................................................................................................. 26 Consolidated statement of changes in equity ............................................................................................. 27

Notes to consolidated financial statements ........... 28 — — — — — — — — — — — — — — — — — — — — — — — — —

Note 1: Operating costs .............................................................................................................................. 29 Note 2: Gain on sale of non-current assets, etc., net ............................................................................. 30 Note 3: Financial income and expenses .................................................................................................. 30 Note 4: Tax ..................................................................................................................................................... 31 Note 5: Intangible assets ............................................................................................................................ 32 Note 6: Property, plant and equipment ................................................................................................... 34 Note 7: Investments in joint ventures and associated companies ..................................................... 37 Note 8: Deferred tax..................................................................................................................................... 38 Note 9: Discontinued operations and assets held for sale .................................................................. 39 Note 10: Share-based payment ................................................................................................................. 41 Note 11: Borrowings and net debt reconciliation .................................................................................. 44 Note 12: Pensions and similar obligations.............................................................................................. 44 Note 13: Provisions ...................................................................................................................................... 48 Note 14: Derivatives ..................................................................................................................................... 48 Note 15: Financial instruments by category ............................................................................................ 50 Note 16: Financial risks, etc. ....................................................................................................................... 52 Note 17: Commitments .............................................................................................................................. 56 Note 18: Contingent liabilities, pledges, etc. .......................................................................................... 57 Note 19: Cash flow specifications ............................................................................................................. 58 Note 20: Acquisition/sale of subsidiaries and activities........................................................................ 58 Note 21: Related parties ............................................................................................................................. 61 Note 22: Events after the balance sheet date ......................................................................................... 62 Note 23: Accounting policies ..................................................................................................................... 62 Note 24: Significant accounting estimates and judgements ............................................................... 69 Note 25: Company overview ...................................................................................................................... 73

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

CONSOLIDATED INCOME STATEMENT FOR 1 JANUARY TO 31 DECEMBER Note

Amounts in DKKm Revenue

Operating costs Other income Other costs Profit before depreciation, amortisation and impairment losses, etc.

2017

2016

209,819

189,288

- 185,999

- 171,349

1,293

1,164

- 1,264

- 1,145

Note

Amounts in DKKm

2017

2016

- 2,991

- 8,366

2,404

- 2,220

396

Fair value adjustment for the year

159

Reclassified to income statement, gain on sale of non-current assets, etc., net

- 343

2,237

- 1,554

Profit/loss for the year Translation to functional currency Translation impact arising during the year Reclassified to income statement, gain on sale of non-current assets, etc., net

23,849

17,958

- 23,766

- 17,716

Gain on sale of non-current assets, etc., net

1,858

1,969

Share of profit/loss in joint ventures Share of profit/loss in associated companies

- 865 4,863

876 3,853

Profit/loss before financial items Financial income

5,939 9,211

6,940 4,830

- 13,425 1,725

- 9,162 2,608

Cash flow hedges

5,6

Depreciation, amortisation and impairment losses, net

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Other equity investments (assets available-for-sale) 15

Financial expenses Profit/loss before tax

Tax Profit for the year - continuing operations

- 1,464 261

- 1,107 1,501

Reclassified to income statement:

Profit for the year - discontinued operations Profit/loss for the year

- 3,252 - 2,991

- 9,867 - 8,366

- operating costs

Value adjustment of hedges for the year - revenue

Of which: Non-controlling interests A.P. Møller Holding A/S' share of profit for the year

- 4,379

- 7,017

1,388

- 1,349

4 7

Maersk Oil, Maersk Drilling and Maersk Supply Service, business activities in A.P. Moller – Maersk, are classified as discontinued operations and assets held for sale. Comparative figures have been restated for the income statement and cash flow statement, while the balance sheet has not been restated.

- 26

- 297

249

- financial expenses

363

430

- discontinued operations

- 20

269

Reclassified to cost of property, plant and equipment

- 185

780

Tax on other comprehensive income

- 211

105

- 863

- 129

3,798

- 2,207

Share of other comprehensive income of joint ventures and associated companies, net of tax Total items that have been or may be reclassified subsequently to the income statement

Other equity investments (FVOCI), fair value adjustments for the year

Actuarial gains/losses on defined benefit plans, etc. Translation from functional currency to presentation currency

Tax on other comprehensive income

911

1,050

- 646

- 26,623

6,842

- 66

Total items that will not be reclassified to the income statement

- 24,728

6,196

Other comprehensive income, net of tax Total comprehensive income for the year

- 20,930 - 23,921

3,989 - 4,377

Of which: Non-controlling interests

- 16,568

- 4,475

- 7,353

A.P. Møller Holding A/S' share

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

CONSOLIDATED BALANCE SHEET AT 31 DECEMBER Note

Amounts in DKKm

Intangible assets

2017

2016

27,130

25,538

Property, plant and equipment

199,955

292,753

Investments in joint ventures

8,652

12,337

Investments in associated companies

38,584

38,844

251

5,617

Derivatives Pensions, net assets

1,614 1,850

95 675

Borrowings, non-current

Loans receivable Other receivables

912 1,896

895 4,464

Pensions and similar obligations

1,781

1,679

53,759

62,927

Provisions

6,309

25,204

Derivatives

857

3,714

1,911

4,172

Deferred tax

2,863

4,269

282,755

385,390

Other equity investments 14 12

Financial non-current assets, etc. 8

Deferred tax Total non-current assets Inventories

Note

Amounts in DKKm Share capital Reserves Proposed dividend Equity attributable to A.P. Møller Holding A/S

119,018

500

113,549

121,518

115,953

134,858

229,502

256,376

95,743

93,972

Other payables Other non-current liabilities

Trade receivables Tax receivables

24,680 1,566

26,896 2,083

Borrowings, current

Derivatives Loans receivable

724 1,468

1,134 1,426

Provisions

Other receivables

5,693

6,720

Prepayments

3,668

4,243

37,799

42,502

215

604

15,234 93,086

Total current assets Total assets

Cash and bank balances Assets held for sale

2,000

111,049

Total equity

6,084

Securities

2016

2,000

Non-controlling interests

6,209

Receivables, etc.

2017

Total non-current liabilities

447

233

12,257

35,099

108,000

129,071

20,413

17,398

3,429

8,856

Trade payables Tax payables

33,152 1,754

34,581 1,492

Derivatives Other payables

810 7,899

3,784 9,519

Deferred income Other current liabilities

1,030 48,074

3,176 61,408

29,058 728

Liabilities associated with assets held for sale Total current liabilities

29,309 97,796

113 78,919

152,543

78,976

Total liabilities

205,796

207,990

435,298

464,366

Total equity and liabilities

435,298

464,366

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

CONSOLIDATED CASH FLOW STATEMENT

Note

Amounts in DKKm

2017

2016

5,939

6,940

Depreciation, amortisation and impairment losses, net Gain on sale of non-current assets, etc., net

23,766 - 1,826

17,716 - 1,376

Currency translation effect on cash and cash equivalents Net cash flow for the year

Share of profit/loss in joint ventures Share of profit/loss in associated companies

865 - 4,863

- 876 - 3,853

Change in working capital

- 2,228

- 2,670

- 802

- 1,522

Profit/loss before financial items 5,6

Change in provisions and pension obligations, etc. Other non-cash items

1,059

690

21,910

15,049

3,184

3,187

808

460

Financial expenses paid

- 5,818

- 4,455

Taxes paid

- 1,211

- 3,071

Cash flow from operating activities Purchase of intangible assets and property, plant and equipment

18,873 - 24,304

11,170 - 14,983

Sale of intangible assets and property, plant and equipment Acquisition of subsidiaries and activities

2,995 - 27,411

2,982 - 4,762

Sale of subsidiaries and activities

2,073

Sale of associated companies

2,358

Other financial investments, net Cash flow used for capital expenditure

5,264 - 39,025

5,601 - 11,068

Purchase/sale of securities, trading portfolio Cash flow used for investing activities Repayment of borrowings Proceeds from borrowings

375 - 38,650 - 17,913 28,791

1,832 - 9,236 - 14,505 20,023

0 92

- 1,856 13

- 500 - 2,158

- 1,000 - 4,173

26 24

0 - 266

Cash flow from financing activities Net cash flow from continuing operations Net cash flow from discontinued operations

8,362 - 11,415 - 126

- 1,764 170 3,445

Net cash flow for the year

- 11,541

3,615

Cash flow from operating activities before financial items and tax Dividends received Financial income received

Purchase of own shares Sale of own shares Dividends distributed Dividends distributed to non-controlling interests Sale of non-controlling interests Other equity transactions

Note

Amounts in DKKm

2017

2016

Cash and cash equivalents at 1 January

28,859

27,821

- 1,438 - 11,541

- 2,577 3,615

Cash and cash equivalents at 31 December Of which classified as assets held for sale

15,880 - 720

28,859 - 135

Cash and cash equivalents at 31 December

15,160

28,724

Cash and bank balances Overdrafts

15,234 - 74

29,058 - 334

Cash and cash equivalents at 31 December

15,160

28,724

Cash and bank balances include DKK 6.2bn (DKK 7.8bn) relating to cash and bank balances in countries with exchange rate control or other restrictions. These funds are not readily available for other group companies.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Note

Amounts in DKKm Equity at 1 January 2016 Other comprehensive income, net of tax

- 1,080 - 988

- 581 - 99

Total equity

1,000 0

122,744 1,447

144,363 2,542

267,107 3,989

Retained earnings

Proposed dividend

- 854 106

122,259 2,428

- 1,849

500

- 1,349

- 7,017

- 8,366

Total comprehensive income for the year

- 988

- 99

106

579

500

- 4,475

- 4,377

Dividends to shareholders

- 1,000

- 4,173

- 5,173

Value of share-based payment

- 20

- 27

- 47

Acquisition of non-controlling interests

- 178

985

807

Purchase of own shares

- 1,856

Sale of own shares

Capital increases and decreases

101

Other equity movements

- 134

- 69

- 203

Total transactions with shareholders

- 324

- 1,000

- 1,324

- 5,030

- 6,354

2,000

- 2,068

- 680

- 748

122,514

500

121,518

134,858

256,376

2017 Impact due to implementation of new accounting standards

- 418

2,000

- 2,068

- 680

- 748

122,096

500

121,100

134,858

255,958

Other comprehensive income, net of tax Profit/loss for the year

0 0

1,335 0

427 0

817 0

- 11,320 888

0 500

- 8,741 1,388

- 12,189 - 4,379

- 20,930 - 2,991

Total comprehensive income for the year Dividends to shareholders

0 0

1,335 0

427 0

817 0

- 10,432 0

500 - 500

- 7,353 - 500

- 16,568 - 2,158

- 23,921 - 2,658

Value of share-based payment Sale of non-controlling interests

0 0

26 0

0 0

26 0

40 - 106

66 - 106

Sale of own shares Capital increases and decreases

0 0

39 - 24

0 0

39 - 24

53 123

92 99

Transfer of loss on disposal of equity investments at FVOCI to retained earnings Change in non-controlling interest

0 0

0 -6

322 -2

0 -2

- 322 280

0 0

0 270

0 - 270

0 0

Other equity movements Total transactions with shareholders

0 0

0 -6

0 320

0 -2

-9 - 10

0 - 500

-9 - 198

- 19 - 2,337

- 28 - 2,535

2,000

- 739

111,654

500

113,549

115,953

229,502

Adjusted equity at 1 January 2017

Equity at 31 December 2017 1

2,000 0

Total

Noncontrolling interests¹

Reserve for hedges

Profit/loss for the year

Equity at 31 December 2016

Share capital

Reserve for other Translation equity inreserve vestments

Non-controlling interests primarily relate to 58% of the equity in A.P. Møller – Mærsk A/S.

A.P. MØLLER HOLDING A/S ANNUAL ∙ REPORT 2017 2017

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 1: Operating costs Customary agreements have been entered into with employees regarding compensation in connection with resignation with consideration for local legislation and collective agreements.

Amounts in DKKm

2017

2016

Costs of goods sold

3,070

3,161

Bunker costs Terminal costs

23,448 37,379

14,352 35,049

For information about share-based payment, reference is made to note 10.

Intermodal costs Port costs

20,611 14,093

19,304 12,500

Fees and remuneration to the Management Board

2017

2016

Rent and lease costs Staff costs

16,036 28,172

16,208 28,082

Fixed annual fee Cash incentive

11 6

5 1

Other Total operating costs

43,190 185,999

42,693 171,349

Total remuneration to the Executive Board

Remuneration of employees Wages and salaries

The Board of Directors has received fees of DKK 4.5m (DKK 4.2m). 24,183

23,438

217 152

525 181

1,565 2,154

2,244 1,991

28,271

28,379

Severance payments Pension costs, defined benefit plans Pension costs, defined contribution plans Other social security costs Total remuneration Of which: Recognised in the cost of assets Included in exploration and restructuring costs

-7 - 92

- 27 - 270

Expensed as staff costs

28,172

28,082

Average number of employees¹

78,127

78,613

Fees to statutory auditors PwC¹ Statutory audit Other assurance services Tax and VAT advisory services Other services Total fees 1

PwC including network firms

2017

2016

2017

2016

121

108

8 0

0 7

15 13

0 27

15 65

8 49

43 192

16 151

PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab.

The average number of employees including discontinued operations is 85,686 (87,739).

Rent and lease costs include contingent rent totalling DKK 1.3bn (DKK 1.3bn), which relates entirely to operating leases.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 2: Gain on sale of non-current assets, etc., net Amounts in DKKm

Note 3: Financial income and expenses 2017

2016

Amounts in DKKm

2017

2016

Gains

2,187

1,969

Interest expenses on liabilities

- 4,342

- 3,968

Losses Gain on sale of non-current assets, etc., net

- 329 1,858

0 1,969

Of which borrowing costs capitalised on assets¹ Interest income on loans and receivables

429 626

330 559

0 - 387

20 - 464

34 - 3,640

24 - 3,499

Interest income on securities Fair value adjustment transferred from equity hedge reserve (loss)

In 2017, gains were primarily related to A.P. Moller – Maersk’s sale of subsidiaries and activities, and sale of other financial investments. In 2016, gains were primarily related to dividends received from available-for-sale investments of DKK 593m and A.P. Moller – Maersk’s sale of shares in Danmarks Skibskredit (Danish Ship Finance) of DKK 363m.

Unwind of discount on provisions Net interest expenses Exchange rate gains on bank balances, borrowings and working capital Exchange rate losses on bank balances, borrowings and working capital Net foreign exchange gains/losses

4,374

3,538

- 7,204 - 2,830

- 3,721 - 183

Fair value gains from derivatives

3,968

430

Fair value losses from derivatives Fair value gains from securities

- 1,984 230

- 1,340 257

Fair value losses from securities Net fair value gains/losses

-1 2,213

- 21 - 674

Dividends received from securities

Impairment losses on financial non-current receivables

-2

- 4,214

- 4,332

Financial expenses, net Of which: Financial income Financial expenses 1

9,211

4,830

- 13,425

- 9,162

The capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation is 4.1% (4.1%).

For an analysis of gains and losses from derivatives, reference is made to note 15.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 4: Tax Amounts in DKKm

2017

2016

Tax recognised in the income statement

Amounts in DKKm

2017

2016

1,725 - 1,073

2,608 4,402

0 865

- 16 - 876

- 4,863 - 3,346

- 4,519 1,599

- 736

352

0 349

- 13 148

Tax reconciliation

Current tax on profits for the year Adjustment for current tax of prior periods

1,799 - 472

977 - 1,012

Utilisation of previously unrecognised deferred tax assets Total current tax

- 33 1,294

- 24 - 59

Internal gain/loss on sale of assets Share of profit/loss in joint ventures

Origination and reversal of temporary differences Adjustment for deferred tax of prior periods

- 210 33

444 213

Share of profit/loss in associated companies Profit/loss before tax, adjusted

Adjustment attributable to changes in tax rates and laws Recognition of previous unrecognised deferred tax assets

- 165 - 78

112 - 37

Tax using the Danish corporation tax rate (22.0%)

Reassessment of recoverability of deferred tax assets, net Total deferred tax

107 - 313

70 802

Effect of income taxes on oil and gas Tax rate deviations in foreign jurisdictions

981 483

743 364

Non-taxable income Non-deductible expenses

- 634 729

- 515 525

1,464

1,107

Adjustment to previous years' taxes Effect of changed tax rate

- 439 - 165

- 784 112

Change in recoverability of deferred tax assets Deferred tax asset not recognised

-4 1,108

9 334

773 981

575 743

- 277

105

Total income tax Tonnage and freight tax Total tax expense

Proft/loss before tax Profit/loss subject to Danish and foreign tonnage taxation, etc.¹

Other differences, net Total income tax Tax recognised in other comprehensive income and equity Of which: Current tax Deferred tax .

- 79

- 30

- 198

135

Including impairment losses on vessels, rigs under tonnage taxation.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 5: Intangible assets

Goodwill

Terminal and service concession rights²

Oil concession rights

Customer relations and brand name

Other rights³

Total

Cost At 1 January 2016 Addition

3,380 0

10,406 1,745

51,347 2,956

0 0

3,955 827

69,088 5,528

Acquired in business combinations Disposal

1,666 0

5,687 0

0 - 3,464

0 0

237 - 32

7,590 - 3,496

-9 112

0 301

0 1,664

0 0

0 144

-9 2,221

At 31 December 2016 Addition

5,149 0

18,139 1,617

52,503 495

0 0

5,131 255

80,922 2,367

Acquired in business combinations¹ Disposal

2,561 0

0 0

0 - 1,175

7,546 0

0 - 24

10,107 - 1,199

Transfer, assets held for sale Exchange rate adjustment

0 - 571

0 - 1,695

- 48,451 - 3,372.0

0 - 458

- 1,591 - 440

- 50,042 - 6,536

At 31 December 2017

7,139

18,061

7,088

3,331

35,619

Amortisation and impairment losses At 1 January 2016 Amortisation

2,785 0

1,481 438

48,716 487

0 0

2,979 341

55,961 1,266

0 0

0 - 3,464

0 0

74 - 30

74 - 3,494

Amounts in DKKm

Transfer, assets held for sale Exchange rate adjustment

Impairment losses Disposal Exchange rate adjustment

1,459

1,577

2,791 0

1,936 522

47,198 277

0 40

3,459 387

55,384 1,226

Impairment losses Disposal

0 0

845 - 20

0 0

172 - 58

1,017 - 78

Disposal on sale of businesses Transfer, assets held for sale

0 0

- 1,083 - 43,361

0 0

0 - 865

- 1,083 - 44,226

Exchange rate adjustment At 31 December 2017

- 141 2,650

- 235 3,048

- 3,031 0

-3 37

- 341 2,754

- 3,751 8,489

Carrying amount: At 31 December 2016

2,358

16,203

5,305

1,672

25,538

At 31 December 2017

4,489

15,013

7,051

577

27,130

At 31 December 2016 Amortisation

1 2

Acquisition of Hamburg Süd, please refer to note 20 “Acquisition/sale of subsidiaries and activities”. Of which DKK 4,016m (DKK 628m) is under development. DKK 211m (DKK 239m) is related to terminal rights with indefinite useful life in Poti Sea Port Corp. The impairment test is based on the estimated fair value according to business plans. An average discount rate of 14.8% (12.9%) p.a. after tax has been applied in the calculations. Furthermore, the developments in volumes and rates are significant parameters. Service concession rights with a carrying amount of DKK 583m (DKK 670m) have restricted title.

Of which DKK 124m (DKK 303m) is related to ongoing development of software.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 5: Intangible assets - continued Impairment analysis The recoverable amount of each cash generating unit (CGU) is determined on the basis of the higher of its value-in-use or fair value less cost to sell. The value-in-use is calculated using certain key assumptions for the expected future cash flows and applied discount factor.

For the intangible assets in A.P. Moller – Maersk the impairment losses can be specified as follows: Applied discount rate p.a. after tax 2017

The cash flow projections are based on financial budgets and business plans approved by management. In nature, these projections are subject to judgement and estimates that are uncertain, though based on experience and external sources where available. The discount rates applied reflect the time value of money as well as the specific risks related to the underlying cash flows, i.e. project and/or country specific risk premium. Further, any uncertainties reflecting past performance and possible variations in the amount or timing of the projected cash flows are generally reflected in the discount rates.

Terminal and service concession rights Other rights Total

2016

Impairment losses 2017

2016

6.5%-12.5%

845

6.5%-8%

172 1,017

74 74

After impairment losses the recoverable amount of the impaired intangible assets is nil.

During 2017, certain terminals were faced with challenging market outlooks with decreasing volumes and rates which resulted in impairment losses as recoverable amounts were lower than the carrying amount. The key assumptions for APM Terminals' value calculations are container moves, revenue and cost per move and discount rates. The cash flow projections cover the concession period and extension options where deemed likely that they will be exercised. The growth rates assumed reflect current market expectations for the relevant period.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 6: Property, plant and equipment

Amounts in DKKm

Production Ships, con- facilities and tainers, equipment, etc. etc.

Construction work in progress and payment on Rigs account

Total

Cost

Amounts in DKKm

Production Ships, con- facilities and tainers, equipment, etc. etc.

Construction work in progress and payment on Rigs account

Total

Depreciation and impairment losses

At 1 January 2016 Addition¹

298,818 9,870

209,377 - 384

66,828 771

33,164 19,127

608,187 29,384

At 1 January 2016 Depreciation

127,133 15,305

157,972 9,900

15,577 3,831

6,993 -1

307,675 29,035

Acquired in business combinations Disposal

9 - 12,213

2,838 - 713

0 - 72

35 - 841

2,882 - 13,839

Impairment losses Disposal

4,953 - 10,726

82 - 619

9,623 - 26

1,763 - 189

16,421 - 11,560

4,827 - 271

7,971 - 445

626 0

- 13,424 0

0 - 716

- 187 4,447

- 284 4,746

0 1,170

0 312

- 471 10,675

9,653 310,693 10,041 25,093

5,347 223,991 396 198

2,267 70,420 7 0

1,363 39,424 25,506 244

18,630 644,528 35,950 25,535

At 31 December 2016 Depreciation

140,925 15,885

171,797 7,413

30,175 2,291

8,878 0

351,775 25,589

3,789 - 78

1,221 - 1,591

11,223 0

1,657 0

17,890 - 1,669

- 1,040 14,335

- 62,451 9,381

-7 4,278

- 21 - 27,994

- 63,519 0

Disposal Transfer

- 4,002 522

- 62,265 1,083

-7 522

- 46 - 2,127

- 66,320 0

Transfer, assets held for sale Exchange rate adjustment

- 38,179 - 36,057

- 115,406 - 14,960

- 70,177 - 4,521

- 24,968 - 2,549

- 248,730 - 58,087

Transfer, assets held for sale Exchange rate adjustment

- 24,058 - 16,516

- 87,441 - 11,340

- 42,271 - 1,933

- 7,401 - 583

- 161,171 - 30,372

At 31 December 2017

284,886

41,149

9,642

335,677

At 31 December 2017

116,467

18,877

378

135,722

169,768 168,419

52,194 22,272

40,245 0

30,546 9,264

292,753 199,955

16,768 18,949

522 669

0 0

54 24

17,344 19,642

Transfer Transfer, assets held for sale Exchange rate adjustment At 31 December 2016 Addition Acquired in business combinations Disposal Transfer

The negative addition under Production facilities and equipment, etc. is due to adjustments of abandonment provision predominantly in the UK.

Transfer, assets held for sale Exchange rate adjustment

Impairment losses Reversal of impairment losses

Carrying amount: At 31 December 2016 At 31 December 2017 Finance leased assets included in carrying amount: At 31 December 2016 At 31 December 2017

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 6: Property, plant and equipment - continued Acquired in business combinations The additions of DKK 25.5bn are related to the acquisition of Hamburg Süd (see note 20). Transfers Transfers to assets held for sale primarily relate to Maersk Oil, Maersk Drilling and Maersk Supply Service (see note 9). In 2016, transfers were primarily related to APM Terminals’ divestment of Pentalver in the UK and four vessels in Maersk Tankers. Finance leases As part of the Group’s activities, customary leasing agreements are entered into, especially with regard to the chartering of vessels and lease of containers and other equipment. In some cases, the leasing agreements comprise purchase options for the group and options for extension of the lease term. In the financial statements, assets held under finance leases are recognised in the same way as owned assets. Impairment analysis For general information on basis for calculating recoverable amount reference is made to note 24 and note 5. In the cash generating units set out below the impairment test gave rise to impairment losses and reversals.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 6: Property, plant and equipment - continued

Amounts in DKKm

Impairment losses

APM Terminals¹ Maersk Oil²

Terminals Denmark

1,241

Maersk Drilling² Maersk Drilling²

Deepwater rigs Jack-up rigs

6,760 4,463

7,190 2,966

10.5% 10.5%

8.5% 8.5%

10,206

18,752

Maersk Supply²

1,030

5,609

10.5%

8.5%

17,369

23,272

Maersk Supply²

Anchor Handling Tug Supply Vessels³ SSV

1,096

Maersk Supply²

Others

383

219

3,141 17,890

16,421

3 4

All vessels

2017

2016

2017

2016

Recoverable amount

Cash generating unit

Maersk Tankers⁴ Total

2016

Applied discount rate p.a. after tax

Operating segment

A.P. Møller Maersk - Other

2017

Reversal of impairment losses

6.5%-18.3%

2017

2016

3,017 6,272

1,551

8.5%

1,157

10.1%

8.5%

2,614

2,536

10.1%

8.5%

148

78 1,669

10.5%

8.5%

6,958

The impairment loss relates to certain terminals in commercially challenged markets. An additional DKK 136m is recognised as impairment in the income statement and booked as provision (relates to assets that will be delivered in 2018.) For Maersk Oil, Maersk Drilling, and Maersk Supply Service, impairment losses were recognised immediately before the initial classification of the businesses as assets held for sale. The reversal of prior impairments in Maersk Oil reflects an assumed higher fair value of the assets in Denmark. For Maersk Drilling and Maersk Supply Service the impairment analysis is based on a discounted cash flow calculation for the remaining lifetime of the assets. The key assumptions for these calculations are expected day rates, utilisation and discount rate (further details are set out in note 24). Impairment loss of DKK 1.0bn relates to the impairment losses recognised on newbuildings in 2016 (onerous contracts) and reflected here as transfer upon delivery in 2017. For Maersk Tankers’ impairment analysis is based on a fair value assessment and a discounted cash flow calculation for the remaining lifetime of the assets. The key assumptions for these calculations are expected day rates, utilisation and discount rate.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 7: Investments in joint ventures and associated companies Investments in joint ventures Amounts in DKKm

The associated company Danske Bank A/S (100%) only 2017

2016

A.P. Møller Holding A/S' share of: Profit for the year Comprehensive income

Amounts in DKKm

2017

2016

127,081

120,525

- 106,181 20,900

- 100,667 19,858

- 265 20,635

- 736 19,122

Non-current assets

2,271,639

2,282,064

Current assets

1,267,471

1,201,607

- 2,415,575

- 2,412,642

- 970,037 153,498

- 918,757 152,272

82,818

53,211

4,196 - 876

4,223 - 152

Total income - 865 13

876 20

Operating costs, depreciations, financials, tax, etc. Profit for the year Comprehensive income Comprehensive income, total

Investments in associated companies Amounts in DKKm

2017

2016

A.P. Møller Holding A/S' share of: Profit for the year

4,863

3,853

Comprehensive income

- 876

- 149

Non-current liabilities Current liabilities Total assets, net Cash and bank balances A.P. Møller Holding A/S' share of: Profit for the year Comprehensive income

A.P. Møller Holding A/S’ share of profit for the year in Danske Bank A/S amounted to DKK 4.2bn (DKK 4.2bn). A.P. Møller Holding A/S’ share of Danske Bank A/S’ market value at 31 December 2017 amounted to DKK 45.3bn (DKK 42.1bn) and the carrying amount DKK 32.6bn (DKK 32.8bn), including group goodwill DKK 1.0bn (DKK 1.0bn).

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 8: Deferred tax Recognised deferred tax assets and liabilities are attributable to the following: Assets Amounts in DKKm Property, plant and equipment

2017

2016

Liabilities 2017

2016

Net liabilities 2017

2016

Unrecognised deferred tax assets - continuing operations Amounts in DKKm Deductible temporary differences

427

1,042

1,373

11,954

946

10,912

Provisions, etc. Tax loss carry forwards

825 1,201

5,430 7,309

503 0

416 0

- 322 - 1,201

- 5,014 - 7,309

Other Total

352 2,805

770 14,551

1,881 3,757

2,278 14,648

1,529 952

1,508 97

Offsets Total

- 894 1,911

- 10,379 4,172

- 894 2,863

- 10,379 4,269

0 952

0 97

Tax loss carry forwards Total² 2

2017

2016

925

3,198 4,123

3,499 3,591

In addition, deductible temporary differences of DKK 5.6bn (DKK 6.3) and tax loss carry forward of DKK 2.9bn (DKK 3.7bn) relate to discontinued operations.

The unrecognised deferred tax assets have no significant time limitations. There are no substantial unrecognised tax liabilities on investments in subsidiaries, associated companies and joint ventures.

Change in deferred tax, net during the year Amounts in DKKm

2017

2016

- 4,176

- 10,074 4,810

- 954 3,793

7,144 - 1,434

429 130

Recognised in the income statement¹

446

3,398

Other including business combinations

317

853

At 1 January Property, plant and equipment Provisions, etc. Tax loss carry forwards Other

Exchange rate adjustments At 31 December 1

952

Of which DKK 931m (DKK 2,603m) is recognised as an expense in discontinued operations.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 9: Discontinued operations and assets held for sale Maersk Oil, Maersk Drilling and Maersk Supply Service are classified as discontinued operations and assets held for sale in 2017. A.P. Moller - Maersk executed on the strategy to separate its energy businesses in 2017 with an agreement for Total S.A. to acquire Maersk Oil for USD 7,450m (approx. DKK 46bn) in a combined share and debt transaction. The transaction was closed in March 2018. Further, structural solutions for Maersk Drilling and Maersk Supply Service are expected before the end of 2018. In the consolidated financial statements, the results for Maersk Oil, Maersk Drilling and Maersk Supply Service are classified under discontinued operations with a net loss of DKK 3.3bn (loss of DKK 9.9bn), negatively impacted by net impairment losses totalling DKK 11.9bn (DKK 16.2bn), primarily related to Maersk Drilling. Impairment losses and reversals are specified in notes 5 and 6. The cash flow from operating activities was DKK 13.3bn (DKK 19.6bn), while the cash flow used for capital expenditure amounted to DKK 11.6bn (DKK 14.1bn), leaving a free cash flow of DKK 1.7bn (DKK 5.5bn).

Amounts in DKKm

2017

2016

Revenue Expenses

38,750 - 16,480

49,243 - 21,904

Gains/losses on sale of assets and businesses Depreciation, amortisation and impairment losses, net

93 - 19,198

- 106 - 31,157

Profit/loss before tax, etc. Tax

3,165 - 6,417

- 3,924 - 5,943

Profit/loss for the year - discontinued operations

- 3,252

- 9,867

Profit/loss for the period - discontinued operations

Cash flow from discontinued operations Cash flow from operating activities Cash flow used for investing activities Cash flow from financing activities Net cash flow from discontinued operations 1

13,278

19,587

- 11,605 - 1,799

- 14,079 - 2,063

- 126

3,445

The tax relates to the profit from the ordinary activities of discontinued operations.

The results of the discontinued businesses are presented in one separate line in the income statement, cash flow statement and balance sheet. Both the income statement and cash flow statement have been restated in previous years, while the balance sheet has not been restated. Intangible assets held for sale amounts to DKK 4.8bn for Maersk Oil, DKK 0.6bn for Maersk Drilling and DKK 25m for Maersk Supply Service. Property plant and equipment held for sale mainly comprises of Maersk Oil with DKK 41.0bn, Maersk Drilling with DKK 26.7bn and Maersk Supply Service with DKK 5.8bn. Assets held for sale in 2016 were predominantly related to Pentalver in APM Terminals.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 9: Discontinued operations and assets held for sale - continued Amounts in DKKm

2017

2016

5,431 73,982

7 296

Deferred tax assets Other assets

1,514 3,048

21 58

Non-current assets Current assets

83,975 9,111

382 346

Assets held for sale

93,086

728

Provisions

18,986

1,403 8,920

0 106

29,309

113

Balance sheet items comprise Intangible assets Property, plant and equipment

Deferred tax liabilities Other liabilities Liabilities associated with assets held for sale

Maersk Oil On 21 August, A.P. Moller - Maersk announced the sale of Maersk Oil to Total S.A. for USD 7,450m (approx. DKK 46bn) in a combined share and debt transaction. The transaction has been regulatory approved and closed in March 2018. The sale is based on a locked box transaction effective 1 July 2017, whereby all cash flows from Maersk Oil from 30 June 2017 until closing belong to the buyer. As compensation for the lost cash flow, A.P. Moller - Maersk will receive a locked box interest of 3% p.a. of the enterprise value.

Full year 2017 Maersk Drilling reported a loss of DKK 9.9bn (loss of DKK 4.8bn), negatively impacted by an accounting impairment of DKK 11.2bn net of tax prior to classification as discontinued operations. The result was further negatively impacted by a number of idle rigs and the expiration of contracts signed at higher day rates and an accounting loss from the sale of the shares in Egyptian Drilling Company of DKK 310m. The result was positively impacted by high operational uptime and cost savings. Maersk Supply Service Maersk Supply Service has been classified as discontinued operations and assets held for sale, as a structural solution is expected before the end of 2018. Full year 2017 For Maersk Supply Service, the market situation remains challenged with a reported loss of DKK 1.7bn (loss of DKK 8.1bn), negatively impacted by impairments prior to classification as held for sale of DKK 1.2bn (DKK 8.1bn) because of over-supply and reduced long-term demand expectations due to lower offshore spending. At 31 December 2017 Maersk Supply Service has capital commitments related to newbuilding programme for 6 vessels totalling DKK 3.1bn.

Full year 2017 Maersk Oil reported a profit of DKK 7.9bn (DKK 3.0bn). The profit was positively impacted by lower costs due to cost reduction efforts, lower exploration costs, an average oil price of USD 54 per barrel (USD 44 per barrel), 24% higher than for 2016, and one-offs mainly from reversal of impairments, tax and provisions. Full year guidance to the market was an entitlement production between 215,000 boepd and 225,000 boepd. Maersk Oil delivered within the range at 220,000 boepd. The entitlement production of 220,000 boepd was lower than full year 2016 (313,000 boepd) primarily because of the exit from Qatar. At 31 December 2017 Maersk Oil has capital commitments totalling DKK 12.4bn. Maersk Drilling Maersk Drilling has been classified as discontinued operations and assets held for sale, as a structural solution is expected before the end of 2018.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 10: Share-based payment Equity-settled incentive plans (excluding share options plan) A.P. Møller – Mærsk A/S A.P. Moller - Maersk has two different equity-settled incentive plans. The Restricted Shares Plan was introduced in 2013 and grants have been awarded to employees on a yearly basis since 2013. In 2014, A.P. Moller – Maersk established a 3-year Performance Shares Plan for members of A.P. Møller – Mærsk A/S’ Executive Board and other employees. The transfer of restricted and performance shares is contingent upon the employee still being employed and not being under notice of termination and takes place when three years have passed from the time of granting. Transfer of the performance shares to members of A.P. Møller – Mærsk A/S’ Executive Board was further contingent upon the member still being employed in A.P. Moller Maersk at the time of publishing of the Annual Report 2016 for A.P. Møller - Mærsk A/S. The actual transfer of performance shares was further contingent upon the degree of certain financial goals being achieved. This meant that the number of shares that eventually would vest was adjusted during the vesting period. The members of A.P. Møller – Mærsk A/S’ Executive Board as well as other employees are not entitled to any dividends during the vesting period. Special conditions apply regarding illness, death and resignation as well as changes in the Company’s capital structure, etc. A.P. Møller Mærsk A/S’ holding of own B shares will be used to meet the Company’s obligations in connection with the Restricted Shares Plan.

Restricted Shares Plan Employees¹ Outstanding awards under equity-settled incentive plans (excl. share option plans) Outstanding at 1 January 2016 Granted Exercised Adjustment² Forfeited Outstanding at 31 December 2016 Granted Exercised Adjustment Forfeited Outstanding at 31 December 2017

Performance Shares Plan Members of the Executive Board¹

Performance Shares Plan Employees¹

Total fair value¹ DKKm

No.

14,104

1,860

12,099

7,078 5,730

20 0

395 0

0 385

- 620 1,260

- 11,339 312

15,067

843

5,024 4,591

66 842

0 968

- 67 0

14,532

At the time of grant. ² Primarily due to changes in the degree of certain financial goals being achieved.

The fair value of restricted shares (A.P. Møller - Mærsk A/S B shares) granted to 132 (140) employees was DKK 53m (DKK 61m) at the time of grant. The total value of granted restricted shares recognised in the income statement is DKK 53m (DKK 54m). The fair value of performance shares (A.P. Møller - Mærsk A/S B shares) granted to 0 (1) members of A.P. Møller – Mærsk A/S’ Executive Board and to 2 (16) employees was DKK 0m (DKK 7m). The total value of granted performance shares recognised in the income statement is an income of DKK 7m (income of DKK 101m). The fair value per restricted share at the time of grant is DKK 11,550 (DKK 8,463), which is equal to the volume weighted average share price on the date of grant, i.e. 1 April 2017. On 1 April 2017, the restricted shares originally granted in 2014 were settled with the employees. The weighted average share price at that date was DKK 11,550.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 10: Share-based payment - continued The average remaining contractual life for the restricted shares as per 31 December 2017 is 1.3 years (1.4 years).

The fair value of awards granted to 42 (27) employees was DKK 0m (DKK 7m) at the time of grant. The total value of the awards recognised in the income statement is DKK 0m (DKK 20m).

Cash-settled incentive plan

The average remaining contractual life for the cash-settled incentive plan as per 31 December 2017 is 0.3 years (1.1 years).

A.P. Møller – Mærsk A/S In 2015, A.P. Moller - Maersk introduced the Performance Shares Plan to a broader range of employees. The actual settlement of the awards is contingent upon the degree of certain financial goals being achieved, the employee still being employed and not being under notice of termination at the date of settlement. This means that the number of awards that eventually will vest may be adjusted during the vesting period. Depending on the agreement, the settlement will take place two or three years after the initial granting and the employee may have the option to settle the awards in shares.

A.P. Møller Holding A/S A.P. Møller Holding A/S has introduced a cash-settled incentive plan to members of the Executive Board. The incentive plan provides an annual bonus and a three-years bonus programme, which depends on the development of the company’s investments. Bonus is included in Remuneration to A.P. Møller Holding’s Executive Board with DKK 5.8m (DKK 0.5m).

Share option plans The employees are not entitled to any dividends during the vesting period. Special conditions apply regarding illness, death and resignation as well as changes in the Company’s capital structure, etc.

Employees

Total fair value¹

Carrying amount of liabilities

No.

DKKm

Outstanding awards under cash-settled performance share plan Outstanding at 1 January 2016 Granted Adjustment Forfeited Outstanding at 31 December 2016 Granted Adjustment² Outstanding at 31 December 2017

8,816 435

- 8,686 565 0

A.P. Møller – Mærsk A/S In addition to the plans described above, A.P. Moller - Maersk has Share Option Plans for members of A.P. Møller – Mærsk A/S’ Executive Board and other employees. Each share option granted is a call option to buy an existing B share of nominal DKK 1,000 in A.P. Møller - Mærsk A/S. The share options are granted at an exercise price corresponding to 110% of the average of the market price on the first five trading days following the release of A.P. Møller - Mærsk A/S’ Annual Report. Exercise of the share options is contingent upon the option holder still being employed at the time of exercise. The share options can be exercised when at least two years (three years for share options granted to A.P. Møller – Mærsk A/S’ Executive Board members) and no more than seven years (six years for share options granted to employees not members of A.P. Møller – Mærsk A/S’ Executive Board) have passed from the time of grant. Special conditions apply regarding illness, death and resignation as well as changes in A.P. Møller – Mærsk A/S’ capital structure, etc.

780 - 780 0

¹ At the time of grant. ² Due to changes in the degree of certain financial goals being achieved.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 10: Share-based payment - continued The following principal assumptions are used in the valuation:

Members of the Executive Board ¹

Employees¹

No.

Total

Average exercise price

Total fair value¹

No.

DKK

DKKm

7,715 0

15,200 - 1,880

22,915 - 1,880

8,975 8,298

Expired Outstanding at 31 December 2016

- 3,875 3,840

- 5,685 7,635

- 9,560 11,475

9,919 8,298

Exercisable at 31 December 2016

3,840

7,635

11,475

8,298

Granted

4,928

20,839

25,767

12,791

- 3,840

- 7,530 - 105

- 11,370 - 105

8,298 8,298

4,928

- 237 20,602

- 237 25,530

12,791 12,791

Outstanding at 1 January 2016 Exercised

Exercised Expired Forfeited Outstanding at 31 December 2017 Exercisable at 31 December 2017

Share price, five days volume weighted average after publication of Annual Report, DKK Exercise price, DKK Expected volatility (based on historic volatility) Expected term Expected dividend per share, DKK 53

Risk free interest rate

Share options granted to members of the Executive Board

Share options granted to employees not members of the Executive Board

11,628

12,791 31%

5 300

5.75 300

-0.12%

0.01%

¹ At the time of grant.

The share options can only be settled in shares. A.P. Møller - Mærsk A/S’ holding of own B shares will be used to meet the Company’s obligations in connection with the share option plans. The fair value of awards granted to three members of A.P. Møller – Mærsk A/S’ Executive Board and 79 employees was DKK 53m (DKK 0m) at the time of grant. The total value of granted share options recognised in the income statement is DKK 20m (DKK 0m). The weighted average share price at the dates of exercise of share options was DKK 11,778 (DKK 10,154). The average remaining contractual life as per 31 December 2017 is 6.1 years (0.3 years) and the exercise price for outstanding share options is DKK 12,791 (DKK 8,298). The fair value per option granted in 2017 to members of A.P. Møller – Mærsk A/S’ Executive Board is calculated at DKK 2,130 at the time of grant, based on Black & Scholes’ option pricing model. The fair value per option granted in 2017 to employees not members of the Executive Board is calculated at DKK 2,281 at the time of grant based on the same option pricing model.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 11: Borrowings and net debt reconciliation

Note 12: Pensions and similar obligations Non-cash changes

Net debt as at 31 December

Cash flows¹

Acquisitions

Foreign exchange movements

Other²

Net debt as at 31 December

Amounts in DKKm

2016

Bank and other credit institutions Finance lease liabilities

38,226 16,020

14,992 - 2,040

964 4,001

- 2,097 - 2,088

- 1,393 1,136

50,692 17,029

57,124 111,370

- 5,757 7,195

0 4,965

- 2,774 - 6,959

- 158 - 415

48,435 116,156

Issued bonds Total

2017

Borrowings: Classified as non-current Classified as current Derivatives hedge of borrowings, net 1. 2.

93,972 17,398

5,686

95,743 20,413

- 1,479

- 4,416

- 337

Interest

Carrying amount

Minimum lease payments

Interest

Carrying amount

2016

2017

2,307

896

1,411

3,619

813

2,806

Between one and five years After five years

8,829 10,735

2,790 2,165

6,039 8,570

11,262 6,703

1,812 1,930

9,450 4,773

Total

21,871

5,851

16,020

21,584

4,555

17,029

Finance lease liabilities Amounts in DKKm Within one year

Pension and medical plans which, as part of collective bargaining agreements, have been entered into with other enterprises (known as multi-employer plans) are treated as other pension plans. Such defined benefit plans are treated as defined contribution plans when sufficient information for calculating the individual enterprises’ share of the obligation is not available. In 2018, the group expects to pay contributions totalling DKK 223m to funded defined benefit plans (DKK 287m in 2017).

- 546

Difference from the net proceeds from borrowings as presented in the cash flow statement mainly relates to discontinued operations’ repayments of borrowings. Other includes transfers to held for sale, new finance leases and fair value changes.

Minimum lease payments

As employer, the group participates in pension plans according to normal practice in the countries in which the group operates. Generally, the pension plans within the group are defined contribution plans, where contributions are recognised in the income statement on an accrual basis. A number of entities have defined benefit plans, in which retirement benefits are based on length of service and salary level. To a limited extent, these defined benefit plans also include payment of medical expenses, etc.

The finance lease agreements are described in note 6. As at 31 December 2017, DKK 5.0bn of the group’s borrowings, which include change of control clauses and negative pledges relating to assets which are classified as held for sale, have been reclassified to current despite the loans falling due after one year. The terms of the loans require immediate repayment on sale or change of control.

Amounts in DKKm Specification of net liability Present value of funded plans Fair value of plan assets Net liability of funded plans Present value of unfunded plans Impact of minimum funding requirement/ asset ceiling Net liability at 31 December

United Kingdom

Other

Total

United Kingdom

Other

Total

2017

2016

13,915 - 15,728

3,302 - 2,638

17,217 - 18,366

14,209 - 14,753

3,041 - 2,539

17,250 - 17,292

- 1,813

664

- 1,149

- 544

502

- 42

720

473

360

573

- 1,453

1,384

- 69

975

1,004

Of which: Pensions, net assets

1,850

675

Pensions and similar obligations

- 1,781

- 1,679

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 12: Pensions and similar obligations - continued The majority of the group’s defined benefit liabilities are in the UK (78%) and USA (13%). All of the plans in the UK and the majority of the plans in the USA are funded. Although all of the UK plans are now closed to new entrants, active members in the two largest plans continue to accrue new benefits. The smaller UK plans are all closed to new accruals, although a salary link remains in some of the plans. Overall, the plans have an average duration of 16 years and approximately 53% of the obligation is in respect of pensioner members. As well as being subject to the risks of falling interest rates, which would increase the obligation, poor asset returns and pensioners living longer than anticipated, the group is also subject to the risk of higher than expected inflation. This is because many pension benefits, particularly in the UK plans, increase in line with inflation (although some minimum and maximum limits apply).

Significant financial assumptions Discount rate Inflation rate Future salary increase Future pension increase

United Kingdom

Total

United Kingdom

Total

2017

2016

2.5% 3.3% 3.5% 3.0%

2.7% 3.1% 3.1% 2.5%

2.7% 3.4% 3.6% 3.1%

2.9% 3.2% 3.6% 3.0%

Rates of life expectancy reflect the most recent mortality investigations, and in line with market practice an allowance is made for future improvements in life expectancy. The group assumes that future improvements will be in line with the latest projections (1.25% in 2017 and in 2016) for all UK plans.

The liabilities are calculated using assumptions that are the group’s best estimate of future experience bearing in mind the requirements of IAS 19. The sensitivity of the liabilities and pension cost to the key assumptions are as follows: Sensitivities to key assumptions in the UK

2017

2016

Factors

''Change in liability''

Increase

Decrease

Increase

Decrease

Discount rate

Increase/(decrease) by 10 basis points

- 217

223

- 247

254

118

- 130

155

- 169

596

- 583

649

- 635

Inflation rate Life expectancy

Increase/(decrease) by 10 basis points Increase/(decrease) by 1 year

The group’s plans are funded in accordance with applicable local legislation. In the UK, each plan has a Trustee Board that is required to act in the best interests of plan members. Every three years, a formal valuation of the plan’s liabilities is carried out using a prudent basis and if the plan is in deficit, the Trustees agree with the group or the sponsoring employer on a plan for recovering that deficit. The expected contributions to the UK plans for 2018 are DKK 223m (DKK 251m in 2017) of which DKK 56m (DKK 103m in 2016) is deficit recovery contributions. In most of the UK plans, any surplus remaining after the last member dies may be returned to the group. However, the Merchant Navy Ratings Pension Fund (MNRPF) and the Merchant Navy Officers Pension Fund (MNOPF) contributions paid by the group are not refundable in any circumstance and the balance sheet liability reflects an adjustment for any agreed deficit recovery contributions in excess of deficit determined using the group’s assumptions. In 2017, an adjustment of DKK 192m (DKK 327m) was applied in this respect.

31 December Life expectancy 65 year old male in the UK

2017

2037

2016

2036

21.8

23.3

21.9

23.7

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 12: Pensions and similar obligations - continued Specification of plan assets

United Kingdom

Other

Total

United Kingdom

Other

Total

2017

2016

1,999

1,099

3,098

2,519

1,242

3,761

Government bonds Corporate bonds

6,114 3,556

484 441

6,598 3,997

4,903 3,097

487 430

5,390 3,527

Real estate Other assets

701 3,358

31 583

732 3,941

706 3,528

35 345

741 3,873

15,728

2,638

18,366

14,753

2,539

17,292

Amounts in DKKm

Fair value at 31 December

Change in net liability Present value of obligations

Fair value of plan assets

Adjustments

Net liability

Of which: United Kingdom

17,989

17,608

519

900

- 308

Current service cost, administration cost etc. Calculated interest expense/income

135 605

- 40 599

0 0

175 6

47 - 20

Recognised in the income statement in 2016

740

559

181

2,206

2,260

1,675

- 1,675

- 1,628

256

- 141

2,206

1,675

115

646

747

Contributions from the group and employees Benefit payments

7 - 1,049

531 - 807

0 0

- 524 - 242

- 464 0

Settlements Exchange rate adjustment

- 141 - 2,029

- 155 - 2,119

0 - 61

14 29

0 27

Net liability at 31 December 2016

17,723

17,292

573

1,004

Amounts in DKKm Net liability at 1 January 2016

Except for an insignificant portion, the plan assets held by the group are quoted investments. Actuarial gains/losses from changes in financial and demographic assumptions, etc. Return on plan assets, exclusive calculated interest income Adjustment for unrecognised asset due to asset ceiling Adjustment for minimum funding requirement Recognised in other comprehensive income in 2016

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 12: Pensions and similar obligations - continued Change in net liability Present value of obligations

Fair value of plan assets

Adjustments

Net liability

Of which: United Kingdom

17,723

17,292

573

1,004

Current service cost, administration cost etc. Calculated interest expense/income

125 489

- 40 475

0 0

165 14

46 -7

Recognised in the income statement in 2017

614

435

179

Actuarial gains/losses from changes in financial and demographic assumptions, etc.

158

- 1,003

- 805

- 73

- 132

158

- 1,003

- 205

- 1,050

- 977

Amounts in DKKm Net liability at 1 January 2017

Return on plan assets, exclusive calculated interest income Adjustment for unrecognised asset due to asset ceiling Adjustment for minimum funding requirement Recognised in other comprehensive income in 2017 Contributions from the group and employees Benefit payments Settlements Effect of business combinations and disposals Exchange rate adjustment Net liability at 31 December 2017

577

- 571

- 546

- 1,005

- 881

- 124

- 12

1,359

757

602

- 906 17,937

1,188 18,365

-9 359

- 97 - 69

- 17 - 1,453

Multi-employer plans Under collective agreements, certain entities in the group participate together with other employers in defined benefit pension plans as well as welfare/medical plans (multi-employer plans). For the defined benefit pension plans, the group has joint and several liabilities to fund total obligations. In 2017, the group’s contributions are estimated at DKK 885m (DKK 947m) while the contributions to be paid in 2018 are estimated at DKK 956m. In general, the contributions to the schemes are based on man hours worked or cargo tonnage handled, or a combination hereof. No reliable basis exists for allocation of the schemes’ obligations and plan assets to individual employer participants. For the plans where the group has an interest and there is a deficit, the net obligations for all employers totalled DKK 6.8bn (DKK 13.2bn). This net obligation is based on the most recent available financial data from the plan’s trustees, calculated in accordance with the rules for such actuarial calculation in US GAAP. The deficit in some of the schemes may necessitate increased contributions in the future. The welfare/medical plans are by nature contribution plans funded on a pay-as-you-go basis. As for the defined benefit pension plans, the contributions are based on man-hours worked or cargo tonnage handled, or a combination hereof.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 13: Provisions

Amounts in DKKm

Note 14: Derivatives

Abandonment

Onerous and Restructur- Legal disunfavouraing putes, etc. ble contracts

Other

Total

At 1 January 2017

21,080

864

7,495

4,621

34,060

Provision made Amount used

0 - 1,003

317 - 530

1,834 - 991

688 - 898

580 - 304

3,419 - 3,726

Amount reversed Addition from business combinations

- 40

- 188

- 1,350

- 753

- 768

- 3,099

1,545

2,093

3,704

Unwind of discount

403

- 40

370

-3

2,307

- 2,293

- 19,086 - 1,354

- 68 - 51

- 1,903 - 834

- 1,010 - 278

- 215 - 199

- 22,282 - 2,716

At 31 December 2017

341

5,753

2,149

1,495

9,738

Of which: Classified as non-current

3,867

1,462

974

6,309

Classified as current

335

1,886

687

521

3,429

Non-current provisions expected to be realised after more than five years

112

509

621

Transfer Transfer, assets held for sale Exchange rate adjustment

Hedges comprise primarily currency derivatives and interest rate derivatives. Foreign exchange forwards and option contracts are used to hedge the currency risk related to recognised and unrecognised transactions. Interest rate and cross currency swaps are used to hedge interest rate exposure on borrowings. Price hedge derivatives are used to hedge crude oil prices and bunker prices. Amounts in DKKm

2017

2016

Non-current receivables Current receivables

1,614 724

95 1,134

Non-current liabilities

- 857

- 3,714

Current liabilities

- 810

- 3,784

671

- 6,269

Liabilities, net

Restructuring includes provisions for decided and publicly announced restructurings. Legal disputes, etc. include among other things tax, indirect tax and duty disputes. Other includes provisions for warranties and risk under certain self-insurance programmes. The provisions are subject to considerable uncertainty, cf. note 24. Reversals of provisions primarily relate to legal disputes and contractual disagreements, which are recognised in the income statement under operating costs and tax.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 14: Derivatives - continued The fair value of derivatives held at the balance sheet date can be allocated by type as follows:

Fair value, asset Amounts in DKKm

2017

Nominal Fair value, amount of liability derivative 2017

2017

Fair value, Fair value, asset liability 2016

2016

Nominal amount of derivative 2016

Hedge of borrowings Cross currency swaps - EUR

1,490

3,515

2,547

3,614

- GBP

230

437

550

370

- JPY

200

120

192

- SEK - NOK

0 37

422 254

305 693

0 0

967 614

473 674

Interest rate swaps - cash flow hedges

1,037

105

662

0 1,608

37 1,204

500

0 120

28 4,931

500

Main currencies hedged - EUR

674

276

- GBP

480

176

513

- DKK

579

176

553

Other currencies

174

1,098

226

1,015

Total

434

656

- fair value hedges Total

Amounts in DKKm Currency derivatives Interest derivatives Price hedge Total at 31 December

For information about risk management strategy, currencies, maturities, etc. reference is made to note 16. Hedge of borrowings Cross currency swaps are used to swap all non-USD issued bonds. Fixed to floating rate swaps are designated as a combination of fair value and cash flow hedges. The principal amounts hereof are (USD equivalents): EUR 1,835m, GBP 95m, JPY 200m, SEK 171m and NOK 268m. The remaining swaps are fixed to fixed rate or floating to fixed rate swaps and are designated as cash flow hedges of currency and interest risk. The hedge ratio is 1:1. The maturity of the hedge instruments 0-5 years are (USD equivalents): EUR 3,419m, GBP 32m, JPY 89m, SEK 305m and NOK 303m. 5-10 years: GBP 405m, JPY 111m and NOK 390m. Above 10 years: EUR 96m. Cross currency swaps are designated as a combination of hedge of principal cash flow and hedge of interests at a weighted average rate of 3.7%.

Hedge of operating cash flows and investments in foreign currencies

Held for trading

The hedges are expected to be highly effective due to the nature of the economic relation between the exposure and hedge. The source of ineffectiveness is the credit risk of the hedging instruments. For hedges where cost of hedging is applied, the forward points and change in basis spread is recognised in other comprehensive income and transferred with the effective hedge when the hedged transaction occurs. The cost of hedging reserve amounts to DKK 43m.

Fair value

2017

2016

- 99 0

- 914 21

- 25

- 124

- 865

Interest rate swaps are all denominated in USD and pays either floating (fair value hedge) or fixed interest rates (cash flow hedge). The hedge ratio is 1:1 and the weighted average interest rate is 2.2%. The maturity of the interest rate swaps 0-5 years: DKK 2.7bn and 5-10 years DKK 6.8bn. For cash flow hedges related to borrowings DKK 192m is recognised in other comprehensive income and the cash flow hedges reserve is DKK 192m. Reference is made to other comprehensive income. The carrying amount of the borrowings in fair value hedge relation is DKK 19.0bn and the accumulated fair value adjustment of the loans is DKK 174m (negative). The loss on the hedging instrument in fair value hedges recognised in the income statement for the year amounts to DKK 218m (loss of DKK 141m) and the gain on hedged item amounts to DKK 218m (gain DKK 182m).

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 14: Derivatives - continued

Note 15: Financial instruments by category

Hedge of operating cash flows and investments in foreign currencies Currency derivatives hedge future revenue, operating costs and investments/divestments are recognised on an ongoing basis in the income statement and the cost of property, plant and equipment respectively.

Carrying amount

Fair value

Carrying amount

Fair value

2017

2016

2,380 173

2,402 180

2,321 220

2,320 220

Other interest-bearing receivables and deposits Trade receivables

386 24,680

385

649 26,896

650

Other receivables (non-interest-bearing) Cash and bank balances

7,030 15,234

10,315 29,058

Financial assets at amortised cost

49,883

69,459

Amounts in DKKm Carried at amortised cost

Hedges of future revenue and operating costs matures within a year, while hedges of investments mature in 0-2 years. For hedges related to operating cash flows and investment DKK 363m is recognised in other comprehensive income and the cash flow hedge reserve is DKK 363m. Other economic hedges (no hedge accounting applied) Furthermore, the group enters into derivatives to hedge economic risks that are not accounted for as hedging. These derivatives are accounted for as held for trading.

Loans receivable Finance lease receivables

Derivatives

2,338

1,229

Carried at fair value through profit/loss

The gains/losses, including realised transactions, are recognised as follows:

Bonds Shares

106 103

417 182

Amounts in DKKm

Other securities Financial assets at fair value through profit/loss

6 215

5 604

Hedging foreign exchange risk on revenue Hedging foreign exchange risk on operating costs Hedging interest rate risk Hedging foreign exchange risk on the cost of property, plant and equipment Hedging foreign exchange risk on the cost of property, plant and equipment Hedging foreign exchange risk on discontinued operations Total effective hedging

2017

2016

26 297

- 47 - 249

- 363

- 464

- 26

785

- 221

- 548

- 787

171

- 1,742

Ineffectiveness recognised in financial expenses

-6

- 33

Total reclassified from equity reserve for hedges

165

- 1,775

Derivatives accounted for as held for trading:

Carried at fair value through other comprehensive income Other equity investments (FVOCI)¹

251

5,617

Financial assets at fair value through OCI

251

5,617

Total financial assets

52,687

Carried at amortised cost Bank and other credit institutions

50,692

51,773

38,226

39,271

Finance lease liabilities Issued bonds

17,029 48,435

19,315 49,779

16,020 57,124

19,180 58,164

33,152 8,306

34,581 9,706

157,614

155,657

Currency derivatives recognised directly in financial income/expenses

2,205

- 740

Interest rate derivatives recognised directly in financial income/expenses

- 244

- 155

Trade payables Other payables

Oil prices and freight rate derivatives recognised directly in other income/costs

- 132

- 120

Financial liabilities at amortised cost

- 40

- 155

Net gains/losses recognised directly in the income statement

1,789

- 1,170

Total

1,954

- 2,945

Derivatives recognised in income statement for discontinued operations

For information about currencies, maturities, etc., reference is made to note 15.

Derivatives

76,909

1,667

7,498

43 43

46 46

Carried at fair value Other payables Financial liabilities at fair value Total financial liabilities

159,324

163,201

¹ Designated at initial recognition in accordance with IFRS 9. Available-for-sale in 2016.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 15: Financial instruments by category - continued Disposal of the remaining 19% share in Dansk Supermarked Group As the Salling Companies in November were able to complete the final transaction from 2014, A.P. Møller - Mærsk A/S sold its remaining 19% share of Dansk Supermarked Group for DKK 5.5bn equivalent to USD 871m.

Fair value of listed issued bonds is within level 1 of the fair value hierarchy. Fair value of the remaining borrowing items is within level 2 of the fair value hierarchy and is calculated on the basis of discounted future cash flows.

A.P. Moller Holding’s share of the accumulated loss, DKK 338m has been transferred within equity. The loss can be attributed to the development in the DKK/USD exchange rate since initial recognition.

Financial assets and liabilities measured at fair value at 31 December Amounts in DKKm

2017 Level 1

Level 2

Level 3

Financial assets

Equity Investments at fair value through other comprehensive income (FVOCI) After disposal of the remaining 19% share in Dansk Supermarked Group, equity investments at fair value through other comprehensive income (FVOCI) comprise only a number of minor investments. Financial instruments measured at fair value Financial instruments measured at fair value can be divided into three levels: • Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities; • Level 2 — Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); • Level 3 — Inputs for the asset or liability that are not based on observable market data. Fair value of listed securities is within level 1 of the fair value hierarchy. Non-listed shares and other securities are within level 3 of the fair value hierarchy. Fair value of derivatives is mainly within level 2 of the fair value hierarchy and is calculated on the basis of observable market data as of the end of the reporting period. A minor amount of crude oil price derivatives is within level 1 of the fair value hierarchy.

Derivatives Securities

320

2,338

Financial assets at fair value at 31 December

320

Financial liabilities Derivatives Other payables Financial liabilities at fair value at 31 December

146 2,338

1,667 0

1,667

43 43

Level 1

Level 2

Level 3

Financial assets and liabilities measured at fair value at 31 December Amounts in DKKm

146

2016

Financial assets Derivatives

1,229

Securities

709

Financial assets at fair value at 31 December

709

5,512 1,229

5,512

Financial liabilities

Fair value of level 3 assets and liabilities is primarily based on the present value of expected future cash flows. A reasonably possible change in the discount rate is not estimated to affect the Group’s profit or equity significantly.

Derivatives

7,498

Other payables Financial liabilities at fair value at 31 December

46 0

7,498

Financial instruments carried at amortised cost Fair value of the short-term financial assets and other financial liabilities carried at amortised cost is not materially different from the carrying amount. In general, fair value is determined primarily based on the present value of expected future cash flows. Where a market price was available, however, this was deemed to be the fair value.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 15: Financial instruments by category - continued

Note 16: Financial risks, etc.

Movement during the year in level 3

Risk management is most effectively managed de-centrally. Consequently, management in A.P. Moller Holding, A.P. Moller – Maersk, Maersk Tankers and A.P. Moller Capital respectively define their own risk management policies and procedures. As member of the Board of Directors of each affiliate, we monitor business performance in the affiliates closely.

Other equity Investments (FVOCI)

Total financial assets

Other payables

Total financial liabilities

Carrying amount at 1 January 2016

5,779

Addition Disposal

101 - 691

0 0

159 163

0 6

5,512

65 - 5,790

0 0

911

911 0

0 0

- 205 - 347

0 -3

146

Amounts in DKKm

Gains/losses recognised in the income statement Gains/losses recognised in other comprehensive income Exchange rate adjustment, etc. Carrying amount at 31 December 2016 Addition Disposal Gains/losses recognised in the income statement Gains/losses recognised in other comprehensive income Transfer Transfer, assets held for sale Exchange rate adjustment, etc. Carrying amount at 31 December 2017

In 2016, the valuation of the significant financial asset in level 3 was tested against a combination of valuation methodologies taking into account both the retail operations as well as the real estate portfolio owned by Dansk Supermarked Group. The valuation is assessed using both a discounted cash flow model with reference to selected listed peers and real estate yields. The discounted cash flow model relies on a discount rate of 6.5% reflecting a weighted average of an assumed discount rate for the retail business and an assumed yield for the real estate business as well as a long-term terminal growth rate of 2%.

The group’s activities expose it to a variety of financial risks: • • •

Market risks, i.e. currency risk and interest rate risk Credit risk Liquidity risk

The group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise the potential adverse effects on the group’s financial performance. The group uses derivative financial instruments to hedge certain risk exposures. Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the group’s profit or the value of its holdings of financial instruments. Below sensitivity analyses relate to the position of financial instruments at 31 December 2017. The sensitivity analyses for currency risk and interest rate risk have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and the proportion of financial instruments in foreign currencies remain unchanged from hedge designations in place at 31 December 2017. Furthermore, it is assumed that the exchange rate and interest rate sensitivities have a symmetric impact, i.e. an increase in rates results in the same absolute movement as a decrease in rates. The sensitivity analyses show the effect on profit or loss and equity of a reasonably possible change in exchange rates and interest rates.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 16: Financial risks, etc. - continued Currency risk The group’s currency risk relates to the fact that while income from shipping and oil-related activities is denominated mainly in USD, the related expenses are incurred in both USD and a wide range of other currencies such as EUR, NOK, GBP, SEK, SGD and DKK. As the net income is in USD, this is also the primary financing currency. Income and expenses from other activities are mainly denominated in local currencies, thus reducing the group’s exposure to these currencies. The main purpose of hedging the group’s currency risk is to hedge the USD value of the group’s net cash flow and reduce fluctuations in the group’s profit. The group uses various financial derivatives, including forwards, option contracts and cross-currency swaps, to hedge these risks. The key aspects of the currency hedging policy are as follows: • Net cash flows in other significant currencies than USD are hedged using a layered model with a 12-month horizon; • Significant capital commitments or divestments in other currencies than USD are hedged; • Most non-USD debt is hedged, however, depending on the asset-liability match and the currency of the generated cash flow.

Interest rate risk The group has most of its debt denominated in USD, but part of the debt (e.g. issued bonds) is in other currencies such as EUR, NOK, GBP, SEK and JPY. The group strives to maintain a combination of fixed and floating interest rates on its net debt, reflecting expectations and risks. The hedging of the interest rate risk is governed by a duration range and is primarily obtained through the use of interest rate swaps. The duration of the group’s debt portfolio is 1.8 years (2.2 years). A general increase in interest rates by one percentage point is estimated, all other things being equal, to affect profit before tax and equity, excluding tax effect, negatively by approximately DKK 317m and DKK 264m, respectively (positively by approximately DKK 7m and DKK 229m, respectively). This analysis assumes that all other variables, in particular foreign currency rates, remain constant.

An increase in the USD exchange rate of 10% against all other significant currencies to which the group is exposed is estimated to have a positive impact on the group’s profit before tax by DKK 1.3bn (DKK 0.7bn) and to affect the group’s equity, excluding tax, positively by USD 0.0bn (negatively by DKK 0.7bn). The sensitivities are based only on the impact of financial instruments that are outstanding at the balance sheet date, cf. notes 15 and 16, and are thus not an expression of the group’s total currency risk.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 16: Financial risks, etc. - continued Borrowings by interest rate levels inclusive of interest rate swaps

Maturity analysis of trade receivables Next interest rate fixing Carrying amount

0-1 year

1-5 years

5- years

0-3% 3-6%

45,398 63,172

31,242 28,056

10,967 23,703

3,189 11,413

6%Total

7,586 116,156

194 59,492

1,334 36,004

6,058 20,660

Amounts in DKKm 2017

Amounts in DKKm

2017

2016

Receivables not due

15,107

17,837

8,332 1,860

7,611 3,419

More than 1 year overdue Receivables, gross

1,101 26,400

0 28,867

Provision for bad debt Carrying amount at 31 December

- 1,720 24,680

- 1,971 26,896

Less than 90 days overdue 91-365 days overdue

Of which: Bearing fixed interest

52,335

Bearing floating interest

63,821

2016 0-3%

59,961

41,522

11,207

7,232

Amounts in DKKm

2017

2016

3-6% 6%-

40,346 11,063

18,370 709

8,157 2,928

13,819 7,426

Provision at 1 January

1,971

2,057

Total

111,370

60,601

22,292

28,477

Provision made Amount used

1,329 - 726

1,118 - 847

Amount reversed Transfer, assets held for sale

- 435 - 165

- 427 0

- 254 1,720

70 1,971

Of which: Bearing fixed interest

51,941

Bearing floating interest

59,429

The loss allowance provision for trade receivables as at 31 December 2017 reconciles to the opening loss allowance as follows:

Credit risk Trade receivables The group has exposure to financial and commercial counterparties but has no particular concentration of customers or suppliers. To minimise the credit risk, financial vetting is undertaken for all major customers and financial institutions, adequate security is required for commercial counterparties, and credit limits are set for financial institutions and key commercial counterparties.

Exchange rate adjustment Provision at 31 December

Approximately 64% (63%) of the provision for bad debt is related to trade receivables overdue by more than one year.

The group applies the simplified approach to providing the expected credit losses prescribed by IFRS 9, which permits the use of the lifetime expected loss provision for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. In accordance with IFRS 9, also non-due trade receivables have been impaired.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 16: Financial risks, etc. - continued Other financial assets at amortised cost Other financial assets at amortised cost comprise loans receivable, finance lease receivables and other receivables. All of these financial assets are considered to have low credit risk and thus the impairment provision calculated basis of 12 month expected losses is considered immaterial. The financial assets are considered to be low risk when they have low risk of default and the issuer has a strong capacity to meet its contractual cash flow obligations in the near term. Liquidity risk The group’s objective is to maintain a liquidity profile in line with an investment grade credit rating. Capital is managed for the group as a whole. The equity share of total equity and liabilities was 52.7% at the end of 2017 (55.2%). Amounts in DKKm

2017

2016

Borrowings

116,156

111,370

Net interest-bearing debt

100,369

78,700

68,412

83,880

Liquidity reserve¹ 1.

Liquidity reserve is defined as undrawn committed revolving facilities with more than one year to expiry, securities and cash and bank balances, excluding securities and balances in countries with exchange control or other restrictions.

In addition to the liquidity reserve, the group has DKK 25.4bn undrawn committed loans which are dedicated to financing of specific assets, part of which will therefore only become available at certain times in the future. Based on the liquidity reserve, loans for the financing of specific assets, the maturity of outstanding loans, and the current investment profile, the group’s financial resources are deemed satisfactory. The average term to maturity of loan facilities in the group was about four years (about five years at 31 December 2016).

Maturities of liabilities and commitments

Cash flows including interest Carrying amount

0-1 year

1-5 years

5- years

Total

Bank and other credit institutions Finance lease liabilities

50,692 17,028

17,226 3,619

32,182 11,271

6,688 6,703

56,096 21,593

Issued bonds Trade payables

48,435 33,152

3,153 33,152

37,451 0

13,754 0

54,358 33,152

Amounts in DKKm 2017

Other payables

8,347

7,703

410

8,150

Non-derivative financial liabilities

157,654

64,853

81,314

27,182

173,349

Derivatives Total recognised in balance sheet

1,667 159,321

794 65,647

534 81,848

323 27,505

1,651 175,000

Operating lease commitments¹

12,648

28,076

36,328

77,052

Capital commitments¹ Total

14,308 92,603

4,166 114,090

6,955 70,788

25,429 277,481

2016 Bank and other credit institutions

38,226

11,042

22,059

8,059

41,160

Finance lease liabilities Issued bonds

16,020 57,124

2,307 7,261

8,829 37,756

10,735 20,024

21,871 65,041

Trade payables

34,581

Other payables

9,752

9,519

113

120

9,752

Non-derivative financial liabilities Derivatives

155,703 7,498

64,710 3,784

68,757 2,886

38,938 828

172,405 7,498

Total recognised in balance sheet

163,201

68,494

71,643

39,766

179,903

Operating lease commitments¹

11,389

22,069

38,063

71,521

Capital commitments¹

36,406

19,842

7,859

64,107

116,289

113,554

85,688

315,531

Total 1.

Related to continuing operations.

It is of great importance for the group to maintain a financial reserve to cover the group’s obligations and investment opportunities and to provide the capital necessary to offset changes in the group’s liquidity due to changes in the cash flow from operating activities. The flexibility of the financial reserve is subject to ongoing prioritisation and optimisation, among other things, by focusing on release of capital and following up on the development in working capital.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 17: Commitments Operating lease commitments As part of the group’s activities, customary agreements are entered into regarding charter and operating leases of ships, containers, port facilities, etc. The future charter and operating lease payments are:

Amounts in DKKm 2017 Within one year

Capital commitments

A.P. Moller – Maersk1

Maersk Tankers

Other

Total

12,103

544

12,648

Between one and two years Between two and three years

8,881 7,585

81 53

1 0

8,963 7,638

Between three and four years Between four and five years

6,325 5,115

0 36

0 0

6,325 5,151

After five years Total

36,327 76,336

0 714

0 2

36,327 77,052

Net present value²

54,532

664

55,197

2016 Within one year

9,884

Between one and two years Between two and three years

6,702 5,842

709 353

0 0

7,411 6,195

Between three and four years

4,924

5,003

Between four and five years

3,647

3,701

After five years Total

37,710 68,709

24 1,219

0 0

37,734 69,928

Net present value²

46,591

1,143

47,734

1. 2.

A.P. Moller Maersk

Maersk Tankers

Total

2017 Capital commitments relating to acquisition of non-current assets

14,362

1,510

15,872

Commitments towards concession grantors Total capital commitments

9,557 23,919

0 1,510

9,557 25,429

2016 Capital commitments relating to acquisition of non-current assets Commitments towards concession grantors

27,416 10,470

2,035 0

29,451 10,470

Total capital commitments

37,886

2,035

39,921

Amounts in DKKm

The decrease in capital commitments is primarily related to contractual payments during 2017.

DKK 14.3bn of the increase in the operating lease commitments for A.P. Moller - Maersk is due to the acquisition of Hamburg Süd in 2017. The net present value has been calculated using a discount rate of 6% (6%).

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 17: Commitments - continued

Note 18: Contingent liabilities, pledges, etc. No.

Newbuilding programme Container vessels Tanker vessels Tugboats Total

Capital commitments relating to the newbuilding programme

2018

2019

Total

7 9

2 0

9 9

Contingent liabilities Except for customary agreements within the group’s activities, no material agreements have been entered into that will take effect, change or expire upon changes of the control over the company. The necessary facility of DKK 1.3bn (DKK 1.1bn) has been established in order to meet the requirements for using US waters under the American Oil Pollution Act of 1990 (Certificate of Financial Responsibility).

DKKm

Custom Bonds of DKK 2.7bn (DKK 2.7bn) have been provided to various port authorities in India. A.P. Moller - Maersk has entered into certain agreements with terminals and port authorities, etc. containing volume commitments including an extra payment in case minimum volumes are not met.

2018

2019

Total

Container vessels Tanker vessels

7,858 1,204

1,831 306

9,689 1,510

Tugboats Total

266 9,328

0 2,137

266 11,465

DKK 11.5bn of the total capital commitments are related to the newbuilding programme for ships, rigs, etc. at a total contract price of DKK 13.7bn including owner-furnished equipment. The remaining capital commitments of DKK 14.0bn relate to investments mainly within APM Terminals. The capital commitments will be financed by cash flow from operating activities as well as existing and new loan facilities.

The group is involved in a number of legal disputes. The group is also involved in tax disputes in certain countries. Some of these involve significant amounts and are subject to considerable uncertainty. Tax may crystallise if the companies leave the tonnage tax regimes and on repatriation of dividends. Pledges Ships, buildings, etc. with a carrying amount of DKK 23.1bn (DKK 27.9bn) have been pledged as security for loans in the amount of DKK 14.9bn (DKK 16.2bn). Fixed asset investments with a carrying amount of DKK 15.5bn (DKK 30.8bn) have been placed as pledge for the Company’s debt to banks, DKK 5.0bn (DKK 3.2bn).

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 19: Cash flow specifications Amounts in DKKm

Note 20: Acquisition/sale of subsidiaries and activities 2017

2016

Cash flow used for acquisitions in 2017

- 1,610 - 3,234

- 637 - 2,476

Amounts in DKKm

- 237 2,742

- 420 976

111 - 2,228

- 113 - 2,670

Change in working capital Inventories Trade receivables Other receivables and prepayments Trade payables and other payables Exchange rate adjustment of working capital Total

Of which borrowing costs capitalised on assets Changes in trade payables, non-current assets Change in abandonment Total

- 25,672 1,136

- 21,926 6,371

429 - 197

354 219

0 - 24,304

-1 - 14,983

Financial investments Addition, joint ventures

- 144

- 183

Addition, associated companies Disposal, associated companies

0 2,359

- 502 4,142

Addition, assets held for sale Disposal, assets held for sale

- 10 5,749

-3 713

- 1,586 - 975

2,464 - 1,020

5,393

5,611

Addition, receivables Payments regarding receivables Total

Other

Total

7,546 25,536

0 0

7,546 25,536

1,334 125

0 0

1,334 125

6,886 - 3,704

0 0

6,886 - 3,704

- 11,560 26,163

0 0

- 11,560 26,163

Non-controlling interests A.P. Møller Holding A/S' share

0 26,163

0 0

0 26,163

Goodwill Purchase price⁶

2,561 28,724

0 0

2,561 28,724

Contingent consideration paid Cash and bank balances assumed

7 - 1,320

0 0

7 - 1,320

Cash flow used for acquisition of subsidiaries and activities

27,411

Fair value at time of acquisition Intangible assets¹ Property, plant and equipment² Financial assets Deferred tax assets Current assets³ Provisions⁴

Purchase of intangible assets and property, plant and equipment Addition Of which finance leases, etc.

Hamburg Süd

Liabilities⁵ Net assets acquired

1. 2. 3. 4.

5. 6.

Other non-cash items related primarily to adjustment of provision for bad debt regarding trade receivables.

Intangible assets consist mainly of customer relations and brand name rights. Property, plant and equipment consist mainly of container vessels and containers. Currents assets consist mainly of trade and other receivables. Of which DKK 2.1bn relate to unfavourable lease contracts where DKK 1.5bn are reported as non-current provisions and DKK 0.5bn as current provisions. Furthermore, DKK 1.5bn relate to tax provisions, where an indemnification asset of DKK 1.0bn is recognised as a financial asset. Non-current liabilities consist mainly of financial lease obligations, borrowings and other payables whereas current liabilities consist mainly of trade payables. The purchase price of USD 4.4bn (approx. DKK 28.7bn) includes a positive hedge effect of DKK 0.8bn.

Acquisitions during 2017 Hamburg Südamerikanische Dampfschifffahrts-Gesellschaft KG (Hamburg Süd) As of 1 December 2017, the A.P. Moller – Maersk acquired 100% of the shares in Hamburg Süd including partnership shares in asset owning companies (SPCs) owning vessels, newbuild contracts and containers connected hereto. Hamburg Süd is included in the consolidated financial reporting from 1 December 2017.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 20: Acquisition/sale of subsidiaries and activities - continued The goodwill of DKK 2.6bn is primarily attributable to network synergies between Maersk Line and Hamburg Süd including its Brazilian subsidiary Aliança and is not deductible for tax purposes. From the acquisition date to 31 December 2017, Hamburg Süd Group contributed with a revenue of DKK 3.3bn while the result was immaterial. If the acquisition had occurred on 1 January 2017, the impact on group’s revenue would have been DKK 35.7bn (pro forma), while the result would have increased by DKK 0.7bn. For 2017, the acquisition and integration costs amounted to DKK 0.4bn. The accounting for the business combination is considered provisional at 31 December 2017 as the acquisition was only completed on 1 December 2017.

Estimates and judgements Fair value measurement When applying the acquisition method of accounting, fair value assessments are made for identifiable assets acquired and liabilities assumed. Determining fair values at the date of acquisition, by nature entails management to apply estimates. Significant estimates are particularly applied in the valuation of vessels, containers, customer relationships, brands, finance lease obligations and unfavourable contracts.

The fair value of brands has been measured using the relief from royalty method, in which management, based on an analysis has assessed a royalty rate which an independent third party would charge for the use of the brands. Besides the royalty rate, the main input value driver is estimated future revenue. The useful life of brands is estimated at 20 years. The valuation of intangible assets reflects a market participants view applying a discount rate of 9-10%. Property, plant and equipment Fair value of vessels and containers is measured using the market comparison method based on internally prepared valuations compared with external valuations. Financial lease obligations The fair value of financial lease obligations has been measured using a discounted cash flow model in which present value of the obligations has been determined based on the contractual future lease payments and a calculated borrowing rate. Unfavourable contracts The fair value of unfavourable contracts is measured using the market comparison method based on the actual market rates for similar contracts.

The inherent uncertainties in the fair value estimates may result in measurement adjustments in the 12 months following closing of the transaction. Goodwill has been assessed as recoverable at 31 December 2017. Acquired material net assets for which significant accounting estimates have been applied are recognized using the following valuation techniques: Intangible assets Customer relationships have been measured using the excess earnings method, in which the present value of future cash flows from recurring customers expected to be retained after the date of acquisition is valued. The main input value drivers are estimated future retention rates and net cash flows of the acquired customer base. These have been estimated based on management’s analysis of the acquired customer base, historical data and general business insights. The useful life of customer relationships is estimated at 15 years.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 20: Acquisition/sale of subsidiaries and activities - continued Cash flow used for acquisitions in 2016

Amounts in DKKm

Grup Maritim TCB S.L.

Other

Total

5,562 2,879

363 0

5,925 2,879

404 40

0 0

404 40

1,500

263

1,763

Fair value at time of acquisition Intangible assets¹ Property, plant and equipment Financial assets Deferred tax assets Current assets Provisions

- 34

- 5,475 4,876

- 128 498

- 5,603 5,374

Non-controlling interests³ A.P. Møller Holding A/S' share

- 955 3,921

- 249 249

- 1,204 4,170

Goodwill Purchase price

1,668 5,589

0 249

1,668 5,838

0 0

- 13 7

- 807 4,782

- 263 - 20

- 1,070 4,762

Liabilities² Net assets acquired

Contingent consideration assumed Contingent consideration paid Cash and bank balances assumed Cash flow used for acquisition of subsidiaries and activities

¹ Intangible assets consist mainly of terminal rights. ² Liabilities acquired consist mainly of borrowings. ³ Non-controlling interest relates to companies owned less than 100% by Grup Maritim TCB S.L. and it is measured at the non-controlling interest's proportionat share of the acquirees' identifiable net assets.

The goodwill of DKK 1.7bn is attributable to network synergies between APM Terminals and Grup Marítim TCB S.L. in Latin America and on the Iberian Peninsula and is not deductible for tax purposes. From the acquisition date to 31 December 2016, Grup Marítim TCB S.L. contributed with revenue of DKK 1.8bn. If the acquisition had occurred on 1 January 2016, the impact on the group’s revenue would have been DKK 2.1bn. The result contributed to the group is minor. The accounting for the business combination was considered provisional at 31 December 2016 due to certain contingencies, indemnities, etc. Cash flow from sale Amounts in DKKm

2017

2016

1,175 132

0 0

343 944

0 0

- 53 - 969

0 0

Net assets sold Non-controlling interests

1,572 - 172

0 0

A.P. Møller Holding A/S' share Gain/loss on sale¹

1,400 924

0 94

Proceeds from sale

2,324

264

- 205 - 310

0 0

2,073

Carrying amount Property, plant and equipment Financial assets Deferred tax assets Current assets Provisions Liabilities

Change in receivable proceeds, etc. Non-cash items Cash and bank balances sold Cash flow from sale of subsidiaries and activities

Acquisitions during 2016 Grup Marítim TCB S.L. On 8 March 2016, A.P. Moller – Maersk acquired 100% of the shares in Grup Maritim TCB, which owns eight terminals in the Mediterranean and Latin America. The acquisition of two additional operating facilities in the Canary Islands and one in Izmir, Turkey (representing less than 5% of the total transaction by value) did not receive regulatory approval up to 8 March 2016, and is thus excluded from the current business combination. Taking control of Grup Marítim TCB has expanded the A.P. Moller - Maersk’s position in Spain and will accelerate its growth in Latin America. The total enterprise value of DKK 8.4bn consisted of the total purchase price of DKK 5.6bn and acquired net interest bearing debt of DKK 2.8bn. Adjustments to the provisional amounts were made since the acquisition date including the allocation of goodwill of DKK 1.7bn.

¹. Excluding accumulated exchange rate gain/loss previously recognised in equity.

Sales during 2017 In continuing operations, sales during 2017 primarily comprise of Mercosul Line triggered by the Hamburg Süd acquisition, Pentalver in the UK, Dalian terminal in China and Zeebrugge terminal in Belgium. The sale of discontinued operations is disclosed in note 9. Sales during 2016 No material sales of subsidiaries or activities were undertaken in 2016. Non-current assets sold include assets that were previously classified as assets available-for-sale.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 21: Related parties Associated companies Amounts in DKKm

Joint ventures

Management¹

2017

2016

2017

2016

2017

2016

191 2,020

108 1,885

667 4,852

531 5,159

109 6

120 2

Dividends distributed to A.P. Møller og Hustru Chastine Mc-Kinney Møllers Fond til almene Formaal are not included.

Income statement Revenue Operating costs² Remuneration to management Financial income Financial expenses Other costs Assets Other receivables, noncurrent Trade receivables Cash and bank balances

888

854

248 540

240 360

43 1,385

395 275

524 615

681 758

10,310

7,318

149

162

248

275

776

607

925

2,141

2,088

1,036

1,076

Liabilities Guarantees etc. Issued bank guarantees Credit institutions including loan commitments Trade payables Other payables Dividends 1

The Board of Directors and the Executive Board in A.P. Møller Holding A/S and their close relatives (including undertakings under their significant influence). Trade receivables and payables include customary business related accounts in connection with shipping activities. In 2017, Operating costs regarding Management includes commission and commercial receivables to Maersk Broker K/S from chartering as well as purchase and sale of ships.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 22: Events after the balance sheet date In the beginning of March 2018, The Danish Energy Agency issued its approval of A.P. Moller – Maersk’s sale of Mærsk Olie & Gas A/S to global oil major Total S.A., including the conditions for such a transfer. The closing of the transaction took place on 7 March 2018. In April 2018, 30% of Maersk Product Tankers A/S was sold to Mitsui & Co. Ltd. No other events of importance to the Annual Report have occurred during the period from the balance sheet date until the presentation of the financial statements.

Note 23: Accounting policies Basis of preparation The consolidated financial statements for 2017 for A.P. Møller Holding A/S have been prepared on a going concern basis and in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU and further Danish disclosure requirements for large enterprises in class C. The consolidated financial statements are also in accordance with IFRS as issued by the International Accounting Standards Board (IASB). The accounting policies are consistent with those applied in the consolidated financial statements for 2016 except for the below areas. Changes to accounting policies The group has decided to adopt IFRS 9 from 1 January 2017. The implementation of IFRS 9 has not affected the classification and measurement of the group’s financial instruments, and the new standard does not fundamentally change the hedging relationships. The 19% shareholding in Dansk Supermarked Group has been classified as fair value through other comprehensive income. The accumulated loss recognised in other comprehensive income will, as a consequence, remain in equity, as will value adjustments related to this investment following this date. Some equity investments previously classified as assets available for sale have also been classified as fair value through other comprehensive income. The accumulated amount recognised in other comprehensive income for these equity investments is not material. Other equity instruments have

been classified as fair value through the income statement. The effect of this reclassification is also immaterial. The effect of the change from the “incurred loss” model in IAS 39 to the “expected credit loss” model in IFRS 9 is considered immaterial due to the low credit risk in the group, but the “expected credit loss” model has affected the associated company, Danske Bank, see below. Due to immaterial effects from implementing IFRS 9, the 2016 financial statements have not been restated. The effects as of end of 2016 have been recognised at 1 January 2017. The associated company Danske Bank has not yet implemented IFRS 9. Due to the group’s implementation of IFRS 9 in the financial statement for 2017, the effect of IFRS 9 in the financial statement of Danske Bank, has therefore been estimated as the associated company is recognised under the equity method. The estimated effect of IFRS 9 in the associated company is the following: • In accordance with the transition requirements of IFRS 9, comparative figures are not restated as retrospective application of the impairment requirements is not possible without the use of hindsight. • The impact of the reclassification between amortised cost and fair value of certain debt instruments due to the implementation of IFRS 9 has been considered. All reclassifications relate to the reclassification from amortised cost to fair value. The “Impact of the remeasurement” is estimated to insignificant and includes only remeasurement to fair value, i.e. it excludes the impact from the expected credit loss impairment model. • After the implementation of IFRS 9, the allowance account will increase as expected credit losses are to be recognised for all financial assets at amortised cost. Impairments will be made for at least 12 months’ expected credit losses and the portfolio of financial assets for which lifetime expected credit losses are recognised will increase. Currently, impairments are made only for incurred losses. The measurement of the credit risk of loans recognised at fair value will continue to be based on the same approach as that used for impairment of loans at amortised cost. Hence, the fair value of the credit risk on loans at fair value will, from 2018, be based on the expected credit loss approach of IFRS 9 with some adjustments made to reflect the measurement basis being fair value instead of amortised cost. The allowance account has been estimated to increase by approximately DKK 2.5bn, including the impact on loans at fair value of approximately DKK 0.4bn. The total impact on shareholders’ equity, net of tax, of the implementation of IFRS 9 is expected to be approximately DKK 2.0bn. • The implementation of IFRS 9 in the associated company therefore effects the carrying amount of the associated company in the Consolidated Financial Statement of A.P. Møller Holding A/S as of 1 of January 2017 with DKK 0.4bn and the equity negative with DKK 0.4bn.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 23: Accounting policies - continued A number of other changes to accounting standards became effective 1 January 2017. Those relevant to the group are “Recognition of Deferred Tax Assets for Unrealised Losses” (amendments to IAS 12) and “Disclosure initiative” (amendments to IAS 7). The amendments encompass various guidance and clarifications, which only affects disclosures. In addition, “Annual improvements to IFRSs 2012-2014 cycle” became effective 1 January 2017, but has not been endorsed by the EU. The amendments encompass various guidance and clarifications, which would have had no material effect on the financial statements if endorsed by the EU. New financial reporting requirements in 2018 or later The following new accounting standards are relevant for the group for the years commencing from 1 January 2018 or later. The group has not yet adopted the following standards: • IFRS 15 Revenue from contracts with customers • IFRS 16 Leases IFRS 15 is effective from 1 January 2018 and IFRS 16 is effective from 1 January 2019, and both are endorsed by the EU. The group has, in all material aspects, concluded analyses of the impending charges resulting from IFRS 15 and IFRS 16. The key findings are explained below. IFRS 15 Revenue from contracts from customers The group’s current practice for recognising revenue has shown to comply, in all material aspects with the concepts and principles encompassed by the new standard. The following change has been identified, which in our view deviates from current industry practices. In tanker shipping, revenue in accordance with IAS 18 is recognised by the stage of completion from discharge-to-discharge. According to IFRS 15, revenue shall be recognised on transfer of control, which is deemed to occur over time from load-to-discharge. The change will result in a shift in timing for when recognition of revenue from a contract commences. In return, costs incurred in positioning of the tanker to the load port are capitalised as contract costs and amortised as revenue is recognised. The change does not have a material impact on the financial position or performance of the group.

In the associated company, Danske Bank, applying IFRS 15 will have no effect on the retained earnings or opening balance at 1 January 2018. Most of the associated company’s revenue, including net interest income, is not impacted by the implementation of IFRS 15. The associated company’s current accounting for revenue from contracts with customers complies with the new accounting policy after IFRS 15 is implemented. IFRS 16 Leases The new requirement in IFRS 16 to recognise a right-of-use asset and a related lease liability is expected to have a material impact on the amounts recognised in the consolidated financial statements. The group will adopt IFRS 16 on 1 January 2019, applying the following main transition options: • •

No reassessment of lease definition compared to the existing IAS 17 and IFRIC 4 Application of the simplified approach with no restatement of comparative figures for prior periods

As at 31 December 2017, the group has non-cancellable operating lease commitments for continuing operations of DKK 74bn on an undiscounted basis and including payments for service components and variable lease payments which will be recognised under IFRS 16 as an expense in the income statement, on a straight-line basis. A preliminary assessment of the potential impact on the consolidated financial statements of implementing IFRS 16 shows that a lease liability in the range of DKK 37-50bn has to be recognized. This preliminary assessment is based on a number of estimates and assumptions which by nature are subject to significant uncertainty. The actual impact of applying IFRS 16 at 1 January 2019 will, among other factors, depend on future economic conditions – including the composition of the lease portfolio at that date as well as the level of time charter rates, incremental borrowing rates, etc. The associated company Danske Bank, measured under the equity method in the consolidated financial statement, is currently assessing the impact from IFRS 16 on the associated company’s financial statements. It is not yet possible to give an estimate of the effect on the financial statements of the changes to the accounting treatment where the associated company acts as lessee. However, no significant impact on shareholders’ equity is expected.

Accordingly, the impact on the consolidated financial statement is considered immaterial.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 23: Accounting policies - continued IFRS 17, Insurance Contracts In May 2017, the IASB issued IFRS 17, Insurance Contracts. IFRS 17 replaces IFRS 4, Insurance Contracts. IFRS 17 is a comprehensive standard with principles for, for example, the measurement of insurance contracts at a current (fulfilment) value in the balance sheet, the recognition of insurance contract revenue in the income statement and the presentation of information on the performance in relation to insurance contracts. IFRS 17, which is yet to be adopted by the EU, will be effective from 1 January 2021.

Consolidation is performed by summarising the financial statements of the parent company and its subsidiaries, including the proportionate share of joint operations, part-owned vessels and pool arrangements, which have been prepared in accordance with A.P. Møller Holding A/S’s accounting policies. Intra-group income and expenses, shareholdings, dividends, intra-group balances and gains on intra-group transactions are eliminated. Unrealised gains on transactions with associated companies and joint arrangements are eliminated in proportion to the group’s ownership share. Unrealised losses are eliminated in the same way, unless they indicate impairment.

The standard will have no effect on the group, but may have significant impact on the financial statements of the associated company, Danske Bank, due to the new principles for calculating insurance provisions and for the presentation in the income statement and balance sheet. Danske Bank has initiated an analysis to map the effect on the financial statements.

Non-controlling interests’ share of profit/loss for the year and of equity in subsidiaries is included as part of the group’s profit and equity respectively, but shown as separate items.

Consolidation The consolidated financial statements comprise the parent company A.P. Møller Holding A/S, its subsidiaries and proportionate shares in joint arrangements classified as joint operations. Subsidiaries are entities controlled by A.P. Møller Holding A/S. Control is based on the power to direct the relevant activities of an entity and the exposure, or right, to variable returns arising from it. In that connection, relevant activities are those that significantly affect the investee’s returns. Control is usually achieved by directly or indirectly owning or in other ways controlling more than 50% of the voting rights or by other rights, such as agreements on management control. Joint arrangements are entities in which the group, according to contractual agreements with one or more other parties, has joint control. The arrangements are classified as joint ventures, if the contracting parties’ rights are limited to net assets in the separate legal entities, and as joint operations, if the parties have direct and unlimited rights to the assets and obligations for the liabilities of the arrangement. Entities in which the group exercises a significant but non-controlling influence are considered associated companies. A significant influence is usually achieved by directly or indirectly owning or controlling 20-50% of the voting rights. Agreements and other circumstances are considered when assessing the degree of influence.

Foreign currency translation The consolidated financial statements are presented in DKK. The functional currency of the parent company is USD. In the translation to the presentation currency for the parent, subsidiaries, associates or joint arrangements with functional currencies other than DKK, the total comprehensive income is translated into DKK at average exchange rates and the balance sheet is translated at the exchange rates as at the balance sheet date. Exchange rate differences arising from such translations are recognised directly in other comprehensive income and in a separate reserve of equity. The functional currency varies from business area to business area. For A.P. Møller Holding A/S and its subsidiaries’ principal shipping activities, the functional currency is typically USD. This means, among other things, that the carrying amounts of property, plant and equipment and intangible assets and, hence, depreciation and amortisation are maintained in USD from the date of acquisition. For other activities, including container terminal activities and land based container activities, the functional currency is generally the local currency of the country in which such activities are performed, unless circumstances suggest a different currency is appropriate. The functional currency of oil and oil related businesses within discontinued operations is USD. Transactions in currencies other than the functional currency are translated at the exchange rate prevailing at the date of the transaction. Monetary items in foreign currencies not settled at the balance sheet date are translated at the exchange rate as at the balance sheet date. Foreign exchange gains and losses are included in the income statement as financial income or expenses.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 23: Accounting policies - continued Income Statement Revenue Revenue from sale of goods is recognised upon the transfer of risk to the buyer. Revenue from shipping activities is recognised as the service is provided, including a share of revenue from incomplete voyages at the balance sheet date. Invoiced revenue related to an estimated proportion of remaining voyage time and activities at the destination port is deferred. Detention and demurrage fees are recognised at the time of customers’ late return or pick-up of containers. Revenue is recognised net of volume discounts and rebates. Revenue from terminal operations, freight forwarding activities and towing activities is recognised upon completion of the service. In container terminals operated under certain restrictive terms of pricing and service, etc., the value of tangible assets constructed on behalf of the concession grantor is recognised as revenue during the construction.

Statement of comprehensive income Other comprehensive income consists of income and costs not recognised in the income statement, including exchange rate adjustments arising from the translation from functional currency to presentation currency, fair value adjustments of other equity investments (at FVOCI), cash flow hedges, forward points and currency basis spread as well as actuarial gains/losses on defined benefit plans, etc. The group’s share of other comprehensive income in associated companies and joint ventures is also included. Upon disposal or discontinuation of an entity, the group’s share of the accumulated exchange rate adjustment relating to the relevant entity with a non-DKK functional currency is reclassified to the income statement. Accumulated value adjustments of equity instruments classified as equity instruments at fair value through other comprehensive income will remain in equity upon disposal. Other comprehensive income includes current and deferred income tax to the extent the items recognised in other comprehensive income are taxable or deductible.

Lease income from operating leases is recognised over the lease term.

BALANCE SHEET

Share of profit/loss in associated companies and joint ventures Share of profit/loss in associated companies and joint ventures is recognised net of tax and corrected for the share of unrealised intra-group gains and losses. The item also comprises any impairment losses for such investments and their reversal.

Intangible assets Intangible assets are measured at cost less accumulated amortisation and impairment losses. Amortisation is calculated on a straight-line basis over the estimated useful lives of the assets. Intangible assets in connection with acquired customer relations and brand names are amortised over a useful life of 15 and 20 years respectively. IT software is amortised over a useful life of 3-5 years.

Tax Tax comprises an estimate of current and deferred income tax as well as adjustments to previous years. Income tax is tax on taxable profits and consists of corporation tax, withholding tax of dividends, etc. In addition, tax comprises tonnage tax. Tonnage tax is classified as tax when creditable in, or paid in lieu of, income tax. Tax is recognised in the income statement to the extent it arises from items recognised in the income statement, including tax of gains on intra-group transactions that have been eliminated in the consolidation.

For container terminals operated under certain restrictive price and service conditions, etc., concessional rights to collect usage charges are included under intangible assets. The cost includes the present value of minimum payments under concession agreements and the cost of property, plant and equipment constructed on behalf of a grantor of a concession. The rights are amortised from the commencement of operations over the concession period.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 23: Accounting policies - continued Property, plant and equipment Property, plant and equipment are valued at cost less accumulated depreciation and impairment losses. Depreciation is charged to the income statement on a straight-line basis over the useful lives at an estimated residual value. The useful lives of new assets are typically as follows: Ships, etc. Containers, etc. Buildings Terminal infrastructure Plant and machinery, cranes and other terminal equipment Other operating equipment, fixtures, etc.

20-25 years 12 years 10-50 years 10-20 years or concession period, if shorter 5-20 years 3-7 years

Assets held for sale Assets are held for sale, when the carrying amount of an individual non-current asset, or disposal groups, will be recovered principally through a sale transaction rather than through continuing use. Assets are classified as held for sale, when activities to carry out a sale have been initiated, the activities are available for immediate sale in their present condition and the activities are expected to be disposed of within 12 months. Liabilities directly associated with assets held for sale are presented separately from other liabilities. Assets held for sale are measured at the lower of carrying amount immediately before classification as held for sale and fair value less costs to sell and impairment tests are performed immediately before classification as held for sale. Non-current assets are not depreciated or amortised while classified as held for sale. Measurement of deferred tax and financial assets and liabilities is unchanged.

Estimated useful lives and residual values are reassessed on a regular basis. The cost of an asset is divided into separate components, which are depreciated separately if the useful lives of the individual components differ. Dry-docking costs are recognised in the carrying amount of ships when incurred and depreciated over the period until the next dry-docking. The cost of assets constructed by the group includes directly attributable expenses. For assets with a long construction period, borrowing costs during the construction period from specific as well as general borrowings are attributed to cost. In addition, the cost includes the net present value of estimated costs of removal and restoration. Impairment of intangible asset and property, plant and equipment Impairment losses are recognised when the carrying amount of an asset or a cash-generating unit exceeds the higher of the estimated value in use and fair value less costs of disposal. Goodwill is attributed to cash-generating units on acquisition and impaired before other assets.

Leases Lease contracts are classified as operating or finance leases at the inception of the lease. Once determined, the classification is not subsequently reassessed unless there are changes to the contractual terms. Contracts which transfer all significant risks and benefits associated with the underlying asset to the lessee are classified as finance leases. Assets held under finance leases are treated as property, plant and equipment. Investment in associated companies and joint ventures Investments in associated companies and joint ventures are recognised at the group’s share of the equity value inclusive of goodwill less any impairment losses. Goodwill is an integral part of the value of associated companies and joint ventures and is therefore subject to an impairment test together with the investment as a whole. Impairment losses are reversed to the extent the original value is considered recoverable.

Intangible assets and property, plant and equipment are tested for impairment, if there is an indication of impairment. However, annual impairment tests are carried out for goodwill and other intangible assets with indefinite useful lives as well as intangible assets that are not yet in use.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 23: Accounting policies - continued Other financial investments From 1 January 2017, the group classifies its financial assets in equity instruments measured at fair value in the following measurement categories: • through other comprehensive income, or • through the income statement For investments in equity instruments that are not held for trading, this will depend on whether the group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income, otherwise they are recognised through the income statement. Securities, including shares, bonds and similar securities are recognised on the trading date at fair value and subsequently measured at the quoted market price for listed securities and at estimated fair value for non-listed securities. Inventories Inventories mainly consist of bunker, containers (manufacturing), spare parts not qualifying as property, plant and equipment and other consumables. Inventories are measured at cost, primarily according to the FIFO method. The cost of finished goods and work in progress includes direct and indirect production costs. Loans and receivables Loans and receivables are initially recognised at fair value, plus any direct transaction costs and subsequently measured at amortised cost using the effective interest method. For loans and other receivables, write-down is made for anticipated losses based on specific individual or group assessments. For trade receivables, the loss allowance is measured in accordance with IFRS 9, i.e. a provision matrix is applied in order to calculate the minimum impairment. The provision matrix does include an impairment for non-due receivables. Equity Equity includes total comprehensive income for the year comprising the profit/loss for the year and other comprehensive income. Proceeds on the purchase and sale of own shares and dividend from such shares are recognised in equity. The translation reserve comprises A.P. Møller Holding A/S’s share of accumulated exchange rate differences arising on translation from functional currency into presentation currency. The reserve for other equity investments comprises accumulated changes in the fair value of equity investments (at FVOCI), net of tax. Reserve for hedges includes the accumulated fair value of derivatives qualifying for cash flow hedge accounting, net of tax as well as forward points and currency basis spread.

Share-based payments Equity settled performance shares, restricted shares and share options allocated to the executive employees of the group as part of the group’s long-term incentive programme are recognised as staff costs over the vesting period at estimated fair value at the grant date and a corresponding adjustment in equity. Cash settled performance awards allocated to employees as part of the group’s long-term incentive programme are recognised as staff costs over the vesting period and a corresponding adjustment in other payables. At the end of each reporting period, the group revises its estimates of the number of awards that are expected to vest based on the non-market vesting conditions and service conditions. Any impact of the revision is recognised in the income statement with a corresponding adjustment to equity or other payables, when cash settled. Provisions Provisions are recognised when the group has a present legal or constructive obligation from past events. The item includes, among others, legal disputes, onerous contracts, unfavourable contracts acquired as part of a business combination as well as provisions for incurred, but not yet reported incidents under certain insurance programmes, primarily in the USA. Provisions are recognised based on best estimates and are discounted where the time element is significant and where the time of settlement is reasonably determinable. Defined benefit plans Pension obligations are the net liabilities of defined benefit obligations and the dedicated assets adjusted for the effect of minimum funding and asset ceiling requirements. Plans with a funding surplus are presented as net assets on the balance sheet. The defined benefit obligations are measured at the present value of expected future payments to be made in respect of services provided by employees up to the balance sheet date. Plan assets are measured at fair value. The pension cost charged to the income statement consists of calculated amounts for vested benefits and interest in addition to settlement gains or losses, etc. Interest on plan assets is calculated with the same rates as used for discounting the obligations. Actuarial gains/losses are recognised in other comprehensive income. Pension plans where the group, as part of collective bargaining agreements, participates together with other enterprises – so called multiemployer plans – are treated as other pension plans in the financial statements. For defined benefit multi-employer plans where sufficient information to apply defined benefit accounting is not available, the plans are treated as defined contribution plans.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 23: Accounting policies - continued Deferred tax Deferred tax is calculated on temporary differences between the carrying amounts and tax bases of assets and liabilities. Deferred tax is not recognised for differences on the initial recognition of assets or liabilities where at the time of the transaction neither accounting nor taxable profit/loss is affected, unless the differences arise in a business combination. In addition, no deferred tax is recognised for undistributed earnings in subsidiaries, when A.P. Møller Holding A/S controls the timing of dividends, and no taxable dividends are currently expected. A deferred tax asset is recognised to the extent that it is probable that it can be utilised within a foreseeable future. Financial liabilities Financial liabilities are initially recognised at fair value less transaction costs. Subsequently, the financial liabilities are measured at amortised cost using the effective interest method, whereby transaction costs and any premium or discount are recognised as financial expenses over the term of the liabilities. Fixed interest loans subject to fair value hedge accounting are measured at amortised cost with an adjustment for the fair value of the hedged interest component. Liabilities in respect of finance leases are measured at the interest rate implicit in the lease, if practicable to determine, or else at the group’s incremental borrowing rate. Other areas Derivative financial instruments Derivative financial instruments are recognised on the trading date and measured at fair value using generally acknowledged valuation techniques based on relevant observable swap curves and exchange rates. The effective portion of changes in the value of derivative financial instruments designated to hedge highly probable future transactions is recognised in other comprehensive income until the hedged transactions are realised. At that time, the cumulated gains/losses are transferred to the items under which the hedged transactions are recognised. The effective portion of changes in the value of derivative financial instruments used to hedge the value of recognised financial assets and liabilities is recognised in the income statement together with changes in the fair value of the hedged assets or liabilities that can be attributed to the hedging relationship. Currency basis spread and forward points are considered a cost of hedge and deferred in equity.

Business combinations and disposal of subsidiaries Upon acquisition of new entities, the acquired assets, liabilities and contingent liabilities are measured at fair value at the date control was achieved using the acquisition method. Identifiable intangible assets are recognised if they arise from a contractual right or can otherwise be separately identified. The difference between the fair value of the acquisition cost and the fair value of acquired identifiable net assets is recognised as goodwill. Contingent consideration is measured at fair value and any subsequent changes to contingent consideration are recognised as other income or other costs in the income statement. Transaction costs are recognised as operating costs as they are incurred. When the group ceases to have control of a subsidiary, the value of any retained investment is remeasured at fair value and the value adjustment is recognised in the income statement as gain (or loss) on sale of non-current assets. The difference between sales proceeds and the carrying amount of the subsidiary is recognised in the income statement including fair value of contingent consideration at the time of sale. Contingent consideration is re-measured at fair value with changes recognised in the income statement. The effect of the purchase and sale of non-controlling interests without changes in control is included directly in equity. Discontinued operations and assets held for sale Discontinued operations represent a separate major line of business disposed of or in preparation for sale. The results of discontinued operations are presented separately in the income statement and comparative figures are restated. Assets held for sale and associated liabilities from discontinued operations are presented as separate items in the balance sheet, and the cash flows from discontinued operations are presented separately in the cash flow statement and comparative figures are restated. Elimination between continuing business and discontinuing operations are presented in order to present continuing operations as post-separation which entails elimination of interest, borrowing, dividends and capital increases.

The ineffective portion of hedge transactions and changes in the fair values of derivative financial instruments, which do not qualify for hedge accounting, are recognised in the income statement as financial income or expenses for interest and currency based instruments, and as other income/costs for oil price hedges and forward freight agreements.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 23: Accounting policies - continued Assets and liabilities from discontinued operations and assets held for sale except financial assets, etc., are measured at the lower of carrying amount immediately before classification as held for sale and fair value less cost to sell and impairment tests are performed immediately before classification as held for sale. Non-current assets held for sale are not depreciated. In addition to above general accounting policies the following is significant in regard to discontinued operations: Revenue and costs Oil and gas revenue is recognised as revenue upon discharge from the production site, reflecting the production entitlement quantities. In agreements where tax is settled in oil, an amount corresponding to the sales value is recognised as both revenue and tax. For drilling activities revenue is recognised in accordance with the agreed day rates for the work performed to date. Compensations received, or receivable, for early termination are recognised as revenue with deferral of an estimated value of any obligations to standing ready for new engagements in the remaining contract period. Income tax consists of oil tax based on gross measures. Oil tax on gross measures is a special tax in certain countries on the production of hydrocarbons, and is separately disclosed within tax. Assets and liabilities Intangible assets in connection with acquired oil resources (concession rights, etc.) are amortised over the useful life of production until the fields’ expected production periods end – a period of up to 20 years until classification as assets held for sale. In Property, plant and equipment, oil production facilities, where oil is received as payment for the investment (cost oil), depreciation generally takes place concurrently with the receipt of cost oil until classification as assets held for sale. The cost includes the net present value of estimated costs of abandonment. Annual impairment tests are not carried out for oil concession rights in scope of IFRS 6. The useful lives of new assets are 20 years for Rigs and up to 25 years for oil and gas production facilities, etc. – based on the expected production periods of the fields.

Cash flow statement Cash flow from operating activities includes all cash transactions other than cash flows arisen from investments and divestments, principal payments of loans, instalments on finance lease liabilities and equity transactions. Capitalisation of borrowing costs is considered non-cash items, and the actual payments of those are included in cash flow from operations. Cash and cash equivalents comprise cash and bank balances net of bank overdrafts where overdraft facilities form an integral part of the group’s cash management.

Note 24: Significant accounting estimates and judgements The preparation of the consolidated financial statements requires management, on an ongoing basis, to make judgements and estimates and form assumptions that affect the reported amounts. Management forms its judgements and estimates on historical experience, independent advisors and external data points as well as in-house specialists and on other factors believed to be reasonable under the circumstances. In certain areas, the outcome of business plans, including ongoing negotiations with external parties to execute those plans or to settle claims that are raised against A.P. Møller Holding A/S and its subsidiaries, is highly uncertain. Therefore, assumptions may change or the outcome may differ in the coming years, which could require a material upward or downward adjustment of the carrying amounts of assets and liabilities. This note includes the areas in which A.P. Møller Holding A/S is particularly exposed to a material adjustment of the carrying amounts as at the end of 2017. General Aspects of uncertainty In its assumption setting, management deals with different aspects of uncertainty. One aspect of uncertainty is whether an asset or liability exist where the assessment is basis for recognition or derecognition decisions, including assessment of control. Another aspect is the measurement uncertainty, where management makes assumptions about the value of the assets and liabilities that are deemed to exist. These assumptions concern the timing and amount of future cash flows and the risks inherent in these.

Provisions include provisions for abandonment of oil fields.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 24: Significant accounting estimates and judgements - continued Container freight rates The future development in the container freight rates is an uncertain and significant factor impacting especially the Maersk Line activities, where financial results are directly affected by the fluctuation in the container freight rates. Freight rates are influenced by the global economic environment and trade patterns, as well as industry specific trends in respect of supply and demand of capacity. Oil prices The future development in the oil price is an uncertain and significant factor impacting accounting estimates across the group either directly or indirectly. Maersk Line and Maersk Tankers are directly impacted by the price of bunker oil, where the competitive landscape determines the extent of which the development is reflected in the freight rates charged to the customer. APM Terminals is indirectly impacted by the oil price as terminals located in oil producing countries, e.g. Nigeria, Angola, Egypt, Russia, and Brazil, are indirectly impacted by the development in oil prices and the consequences on the countries’ economies, which not only affects volume handled in the terminals, but also the exchange rates. Intangible assets and property, plant and equipment A.P. Moller Holding carries goodwill of DKK 4,489m (DKK 2,358m) and intangible assets with indefinite lives of DKK 211m (DKK 239m). The increase in goodwill relates to the acquisition of Hamburg Süd through a business combination in December 2017 and to the global container activities. The majority of non-current assets is amortised over their useful economic lives. Management assesses impairment indicators across this asset base. Judgement is applied in the definition of cash generating units and in the selection of methodologies and assumptions for impairment tests. The determination of cash generating units differs for the various businesses. Maersk Line and Maersk Tankers operates its fleet of container vessels in an integrated network for which reason the global container shipping activities are tested for impairment as a single cash generating unit. APM Terminals considers each terminal individually in impairment tests, unless the capacity is managed as a portfolio, which is the case for certain terminals in Northern Europe and Global Ports Investments (Russia). Svitzer groups vessels according to type, size, etc. in accordance with the structure governing management’s ongoing follow-up. Projected cash flow models are used when fair value is not obtainable or when fair value is deemed lower than value in use. External data is used to the extent possible and centralised processes, involving corporate functions, ensure that indexes or data sources are selected consistently observing differences in risks and other circumstances. Current market values for vessels, etc. are estimated using acknowledged brokers.

Impairment considerations In Maersk Line, although freight rates improved compared to 2016, and despite generating positive cash flow in the year, the continuing low freight rates are impairment indicators. In addition, the estimated fair value of the fleet continues to be significantly lower than the carrying amount. Consequently, an estimate of the recoverable amount has been prepared by a value in use calculation. The cash flow projection is based on forecasts as per December 2017 covering plans for 20182022. The key sensitivities are: development in freight rates, container volumes, bunker costs, effect of cost savings as well as the discount rate. Management has applied an assumption of growth in volumes and continued pressure on, but increasing freight rates, and continued cost efficiency. The impairment test continues to show headroom from value in use to the carrying amount. Management is of the opinion that the assumptions applied are sustainable. In APM Terminals the decline in activity in oil producing countries is an impairment indicator for the terminals in these countries. Management assesses impairment triggers and based on these estimate recoverable amounts on the individual terminals. For APM Terminals’ interest in Global Port Investments, being the share of equity and significant intangible assets acquired, management assesses the recoverable amount of its interest on an ongoing basis. Uncertain variables in the estimate are the economic outlook in Russia, local competition, effect on volume, operating expenses and discount rate. The carrying amount of the investment may not be sustainable in the next few years, if markets develop significantly adverse compared to current expectations. Estimates of recoverable amounts were also prepared for other terminals where decreasing volumes triggered impairment tests. Impairments of DKK 4.1bn were recognised in 2017 related to terminals in markets with challenging commercial conditions. Continued economic deterioration and lack of cash repatriation opportunities in certain oil producing countries can potentially put further pressure on carrying amounts on terminals in these countries. For Maersk Drilling an impairment charge of DKK 11.6bn before tax was recognised in 2017 due to the continuing challenging market conditions. The current supply/demand imbalance in the offshore rig market along with the uncertainty regarding the future oil price projections driving demand and consequently the day rates are the key drivers for the impairments in Maersk Drilling. The recoverable amount is determined as fair value less cost to sell based on a discounted cash flow model. Day rates are expected to moderately increase in the medium term compared to all-time low rates recently seen. Although a gradual move towards more economically sustainable rates in the long-term is expected, the level is expected to be lower than the historic rates due to continued uncertainty in oil demand and the significant oversupply of rigs in the market. The fair value estimates using the discounted cash flow model is highly uncertain due to the character of the assets and few transactions. The calculations are sensitive to expected future day rates and risks of idle periods in additions to the discount rate.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 24: Significant accounting estimates and judgements - continued For Maersk Tankers an impairment charge of DKK 3.1bn before tax was recognised in 2017 due to the continuing challenging market conditions and pressure on long term market rates. Refer to notes 5 and 6 for information about impairment losses, recoverable amounts and discount rates. Amortisation, depreciation and residual values Useful lives are estimated based on past experience. Management decides from time to time to revise the estimates for individual assets or groups of assets with similar characteristics due to factors such as quality of maintenance and repair, technical development and environmental requirements. Refer to note 23 for the useful lives typically used for new assets. Residual values are difficult to estimate given the long lives of vessels and rigs, the uncertainty as to future economic conditions and the future price of steel, which is considered as the main determinant of the residual price. As a general rule, the residual values of vessels are initially estimated at 10% of the purchase price excluding dry-docking costs. The long-term view is prioritised in order to disregard, to the extent possible, temporary market fluctuations which may be significant. Operations in countries with limited access to repatriating surplus cash A.P. Moller Holding group of companies operates worldwide and in this respect, has operations in countries where the access to repatriating surplus cash is limited. In these countries, management makes judgements as to how these transactions and balance sheet items are recognised in the financial statement.

Provisions for legal disputes, uncertain tax positions, etc. Management’s estimate of the provisions in connection with legal disputes, including disputes on taxes and duties, is based on the knowledge available on the actual substance of the cases and a legal assessment of these. The resolution of legal disputes, through either negotiations or litigation, can take several years to complete and the outcome is subject to considerable uncertainty. The group is engaged in a number of disputes with tax authorities of varying scope. Appropriate provisions have been made where the probability of payment of additional taxes in individual cases is considered more likely than not. Claims, for which the probability of payment is assessed by management to be less than 50%, are not provided for. Such risks are instead evaluated on a portfolio basis by geographical area, and country risk provisions are established where the aggregated risk of additional payments is more likely than not. Deferred tax assets Judgement has been applied in the measurement of deferred tax assets with respect to the group’s ability to utilise the assets. Management considers the likelihood of utilisation based on the latest business plans and recent financial performances of the individual entities. Net deferred tax assets recognised in entities having suffered an accounting loss in either the current or preceding period amount to DKK 1.3bn (DKK 1.0bn) for continuing operations, excluding entities participating in joint taxation schemes. These assets mainly relate to unused tax losses or deductible temporary differences generated, during construction of terminals, where taxable profits have been generated either in the current period or are expected within a foreseeable future.

Provisions for pension and other employee benefits For defined benefit schemes, management makes assumptions about future remuneration and pension changes, employee attrition rates, life expectancy, inflation and discount rates. When setting those assumptions, management takes advice from the actuaries performing the valuation. The inflation and discount rates are determined centrally for the major plans on a country-by-country basis. All other assumptions are determined on a plan-by-plan basis. Refer to note 12 for information about key assumptions and the sensitivity of the liability to changes in those. Plan assets are measured at fair value by fund administrators.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 24: Significant accounting estimates and judgements - continued Assessment of control, joint control or significant influence A.P. Moller Holding’s control, joint control or significant influence over an entity or activity is subject to an assessment of power and exposure to variability in returns. The assessment of control in oil and gas activities entails analysis of the status of operators in joint arrangements. Operators are responsible for the daily management of the activities carried out within the jointly established framework. Since operators are not exposed to, and have no right to, returns beyond the participating share, and since they can be replaced by agreement, the operators are regarded as agents as defined in IFRS 10. Operators of pool arrangements in shipping are assessed similarly. When assessing joint control, an analysis is carried out to determine which decisions require unanimity and whether these concern the activities that significantly affect the returns. Joint control is deemed to exist when business plans, work programmes and budgets are unanimously adopted. Within oil and gas activities, an assessment of joint control is carried out for each phase. These are typically exploration and development, production and decommissioning. Unanimity is often not required during the production phase. Given that the contracting parties have direct and unrestricted rights and obligations in the arrangements’ assets or liabilities regardless of voting rights, the arrangements are accounted for as joint operations during all phases. For pool arrangements in shipping, unanimity is not required in decisions on relevant activities. However, the contracting parties have direct and unrestricted rights and obligations in the unit’s assets or liabilities, and as the pool arrangements are not structured into separate legal entities, they are treated as joint operations. Leasing Judgement is applied in the classification of lease as operating or finance lease. The group enters into a substantial amount of lease contracts, some of which are combined lease and service contracts like time charter agreements. Management applies a formalised process for classification and estimation of present values for finance leases with the use of specialised staff in corporate functions. Discontinued operations and assets held for sale When classifying a disposal group as assets held for sale management applies judgement to the estimated fair value of the disposal group. Depending on the disposal group’s activity, assets and liabilities, the estimated value is encompassed by different levels of uncertainty and thus subsequent adjustments are possible. Measurement of the fair value of disposal group is categorised as Level 3 in the fair value hierarchy as measurement is not based on observable market data.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 25: Company overview

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 25: Company overview - continued A.P. Moller Holding group of companies comprises more than 900 companies.

Major companies of A.P. Møller-Mærsk A/S are listed below.

Companies owned by A.P. Møller Holding A/S are listed below. Country of incorporation

Ownership share

A.P. Møller Mærsk A/S¹

Denmark

41.5%

APMH Invest A/S

Denmark

100%

Subsidiary

Voting right 51.23%

Subsidiary

Country of incorporation

A.P. Moller Finance SA A.P. Moller Singapore Pte. Ltd.

Switzerland Singapore

100% 100%

Addicks & Kreye Container Service GmbH & Co. KG Aliança Navegação e Logística Ltda.

Germany Brazil

51% 100%

APM Terminals - Aarhus A/S APM Terminals Algeciras S.A.

Denmark Spain

100% 100%

APM Terminals Apapa Ltd. APM Terminals B.V.

Nigeria The Netherlands

94% 100%

APM Terminals Bahrain B.S.C. APM Terminals Callao S.A.

Bahrain Peru

APM Terminals China Co. Ltd. APM Terminals Elizabeth, LLC

Hong Kong USA

100% 100%

APM Terminals Gothenburg AB APM Terminals India Pvt. Ltd.

Sweden India

100% 100%

APM Terminals Inland Services S.A. APM Terminals Lazaro Cardenas S.A. de C.V.

Peru Mexico

100% 100%

APM Terminals Liberia Ltd. APM Terminals Maasvlakte II B.V.

Liberia The Netherlands

75% 100%

APM Terminals Management B.V. APM Terminals Mobile, LLC

The Netherlands USA

100% 100%

APM Terminals Moin S.A.

Costa Rica

100%

APM Terminals North America B.V.

The Netherlands

100%

APM Terminals Pacific LLC

USA

100%

APM Terminals Rotterdam B.V.

The Netherlands

100%

APM Terminals Tangier SA

Morocco

Aqaba Container Terminal Company Ltd.

Jordan

Bermutine Transport Corporation Ltd.

Bermuda

100%

Coman SA

Benin

100%

Container Operators S.A.

Chile

100%

Ownership share

80% 51%

90% 50%

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 25: Company overview - continued

Subsidiary

Country of incorporation

Subsidiary

Country of incorporation

Damco (UAE) FZE

United Arab Emirates

100%

Maersk Egypt For Maritime Transport SAE

Egypt

Damco A/S Damco Australia Pty. Ltd.

100%

Denmark Australia

100% 100%

Maersk Energia Ltda. Maersk Energy Marketing A/S

Brazil Denmark

100% 100%

Damco Belgium NV Damco China Ltd.

Belgium China

100% 100%

Maersk Energy UK Ltd. Maersk FPSOs A/S

UK Denmark

100% 100%

Damco Distribution Services Inc. Damco France SAS

USA France

100% 100%

Maersk Gabon SA Maersk Global Service Centres (Chengdu) Ltd.

Gabon China

100% 100%

Damco India Pvt. Ltd.

India

100%

Maersk Global Service Centres (India) Pvt. Ltd.

India

100%

Damco International A/S

Denmark

100%

Maersk Holding B.V.

The Netherlands

100%

Damco Logistics Uganda Ltd. Damco Sweden AB

Uganda Sweden

100% 100%

Maersk Hong Kong Ltd. Maersk Inc.

Hong Kong USA

100% 100%

Damco UK Ltd. Damco USA Inc.

UK USA

100% 100%

Mærsk Innovator Norge A/S Mærsk Inspirer Norge A/S

Denmark Denmark

100% 100%

Farrell Lines Inc. Gateway Terminals India Pvt. Ltd.

USA India

100% 74%

Maersk Integrator Norge A/S Maersk Inter Holding B.V.

Denmark The Netherlands

100% 100%

Hamburg Südamerikanische Dampfschifffahrts-Gesellschaft KG Lilypond Container Depot Nigeria Ltd.

Germany Nigeria

100% 100%

Maersk Interceptor Norge A/S Maersk Intrepid Norge A/S

Denmark Denmark

100% 100%

Maersk (China) Shipping Company Ltd. Maersk A/S

China Denmark

100% 100%

Maersk Line A/S Maersk Line Agency Holding A/S

Denmark Denmark

100% 100%

Maersk Line UK Ltd.

100%

Maersk Agency U.S.A. Inc.

USA

100%

Maersk Line, Limited Inc.

USA

100%

Maersk Aviation Holding A/S

Denmark

100%

Maersk B.V.

The Netherlands

100%

Maersk Logistics Warehousing China Company Ltd. Maersk Oil Angola A/S

Hong Kong Denmark

100% 100%

Maersk Bangladesh Ltd.

Bangladesh

100%

Maersk Container Industry A/S

Denmark

100%

Maersk Oil Brasil Ltda. Maersk Oil GB Ltd.

Brazil UK

100% 100%

Maersk Container Industry Dongguan Ltd.

China

100%

Maersk Container Industry Qingdao Ltd.

China

100%

Maersk Oil Gulf of Mexico Four LLC Maersk Oil Kazakhstan GmbH

USA Germany

100% 100%

Maersk Denizcilik A.Ş.

Turkey

100%

Maersk Drilling A/S

Denmark

100%

Maersk Oil North Sea UK Ltd. Maersk Oil Norway AS

UK Norway

100% 100%

Maersk Drilling Deepwater A/S

Denmark

100%

Maersk Drilling Deepwater Egypt LLC

Egypt

100%

Maersk Oil Qatar A/S Maersk Oil Three PL B.V.

Denmark The Netherlands

100% 100%

Maersk Drilling Holdings Singapore Pte. Ltd.

Singapore

100%

Maersk Drilling International A/S

Denmark

100%

Maersk Oil Trading Inc. Maersk Oil UK Ltd.

USA UK

100% 100%

Maersk Drilling Norge AS

Norway

100%

Mærsk Olie Algeriet A/S

Denmark

100%

Maersk Drilling USA Inc. Maersk Drillship III Singapore Pte. Ltd.

USA Singapore

100% 100%

Mærsk Olie og Gas A/S

Denmark

100%

Maersk Drillship IV Singapore Pte. Ltd.

Singapore

100%

Ownership share

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 25: Company overview - continued

Subsidiary

Country of incorporation

Associate

Country of incorporation

Maersk Shipping Hong Kong Ltd.

Hong Kong

100%

Abidjan Terminal SA

Côte d'Ivoire

Maersk Supply Service (Angola) Lda. Maersk Supply Service A/S

40.0%

Angola Denmark

49% 100%

Brigantine International Holdings Ltd. Brigantine Services Ltd.

Hong Kong Hong Kong

30.0% 30.0%

Maersk Supply Service Canada Ltd. Maersk Supply Service International A/S

Canada Denmark

100% 100%

Congo Terminal Holding SAS Congo Terminal SA

France Republic of the Congo

30.0% 22.5%

Maersk Supply Service UK Ltd. Maersk Treasury Center (Asia) Pte. Ltd.

UK Singapore

100% 100%

British Virgin Islands

33.9%

Maersk Vietnam Ltd.

Vietnam

100%

Cosco Ports (Nansha) Ltd. Guangzhou South China Oceangate Container Terminal Co. Ltd.

China

20.0%

Maersk Viking LLC

USA

100%

MCC Transport Singapore Pte. Ltd. New Times International Transport Service Co. Ltd.

Singapore China

100% 100%

Gujarat Pipavav Port Ltd. Höegh Autoliners Holdings AS

India Norway

43.0% 38.8%

Poti Sea Port Corporation PT Damco Indonesia

Georgia Indonesia

100% 98%

Inttra Inc. Meridian Port Services Ltd.

USA Ghana

25.0% 42.3%

Rederiaktieselskabet Kuling Rederiet A.P. Møller A/S

Denmark Denmark

100% 100%

Salalah Port Services Company SAOG Shanghai Tie Yang Multimodal Transportation Co. Ltd.

Oman China

30.1% 29.4% 32.8%

South Africa Belgium

100% 100%

South Asia Gateway Pvt. Ltd. Tianjin Port Alliance International Container Terminal Co. Ltd.

Sri Lanka

Safmarine (Pty) Ltd. Safmarine MPV NV

China

20.0%

Seago Line A/S Sogester - Sociedade Gestora De Terminais S.A.

Denmark Angola

100% 51%

Suez Canal Container Terminal SAE

Egypt

Svitzer A/S

Denmark

100%

Svitzer Australia Pty Ltd Svitzer Marine Ltd.

Australia UK

100% 100%

Terminal 4 S.A. U.S. Marine Management, Incorporated

Argentina USA

100% 100%

West Africa Container Terminal Nigeria Ltd.

Nigeria

100%

Ownership share

55%

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 25: Company overview - continued

Joint Ventures

Country of incorporation

Anchor Storage Ltd.

Bermuda

51.0%

Ardent Holdings Limited Brasil Terminal Portuario S.A.

UK Brazil

50.0% 50.0%

Cai Mep International Terminal Co. Ltd. Douala International Terminal SA

Vietnam Cameroon

49.0% 43.7%

Companies of Maersk Tankers A/S are listed below.

Eurogate Container Terminal Wilhelmhaven Beteiligungsgesellschaft GmbH First Container Terminal ZAO

Germany Russia

30.0% 30.8%

Subsidiary

Country of incorporation

Global Ports Investments PLC North Sea Terminal Bremerhaven Verwaltungsgesellschaft GmbH Pelabuhan Tanjung Pelepas Sdn. Bhd.

Cyprus

30.8%

Maersk Tankers LR2 General Partner A/S Maersk Tankers MR General Partner A/S

Denmark Denmark

100% 100%

Germany Malaysia

50.0% 30.0%

Handytankers General Partner A/S Brostrom General Partner A/S

Denmark Denmark

100% 100%

Petrolesport OAO Qingdao New Qianwan Container Terminal Co. Ltd.

Russia China

30.8% 18.5%

Maersk Tankers Afra General Partner A/S Maersk Tankers LR2 K/S

Denmark Denmark

100% 100%

Qingdao Qianwan Container Terminal Co. Ltd. Shanghai East Container Terminal Co. Ltd.

China China

20.0% 49.0%

Maersk Tankers MR K/S Handytankers K/S

Denmark Denmark

100% 100%

Smart International Logistics Company Ltd. South Florida Container Terminal LLC

China USA

49.0% 49.0%

Brostrom K/S Maersk Tankers Afra K/S

Denmark Denmark

100% 100%

Vostochnaya Stevedore Company OOO Xiamen Songyu Container Terminal Co. Ltd.

Russia China

30.8% 25.0%

OPSA Operadora Portuaria Maersk Tankers Holland BV

Venezuela Holland

100% 100%

Brostrom AB

Sweden

100%

Maersk Tankers US Inc.

USA

100%

Maersk Tankers US Personnel Inc.

USA

100%

Maersk Tankers India Pvt. Ltd.

India

100%

Maersk Tankers Romania SRL

Romania

100%

Maersk Product Tankers A/S

Denmark

100%

Maersk Tankers Singapore Pte Ltd

Singapore

100%

Maersk Tankers UK Ltd.

100%

Joint ventures

Country of incorporation

Long Range 2 A/S

Denmark

50%

LR 2 Management K/S

Denmark

50%

Ownership share

Companies of APMH Invest A/S are listed below.

Subsidiary

Country of incorporation

Maersk Tankers A/S

Denmark

100%

APMH Invest III ApS

Denmark

100%

APMH Invest IV ApS

Denmark

100%

APMH Invest V ApS

Denmark

100%

A.P. Møller Capital P/S

Denmark

51%

A.P. Møller Capital GP ApS

Denmark

100%

Africa Infrastructure Fund I GP ApS

Denmark

100%

AIF I Sponsor Invest K/S

Denmark

100%

AIF I Management Invest K/S

Denmark

100%

Ownership share

Associate

Country of incorporation

Danske Bank A/S

Denmark

Ownership share 20%

Ownership share

A.P. MØLLERHOLDING HOLDING A/S ANNUAL ∙ REPORT A·P·MOLLER ANNUAL ∙ REPORT 2017 2017

PARENT COMPANY FINANCIAL STATEMENTS

PARENT COMPANY

FINANCIAL

STATEMENTS

Income statement | Balance sheet | Statement of changes in equity | Notes to the financial statements

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

PARENT COMPANY FINANCIAL STATEMENTS

CONTENTS

Notes to parent company financial statements .... 83 — — — — — — — — — — — — — — —

Note 1: Investments in subsidiaries.......................................................................................................... 84 Note 2: Staff costs ........................................................................................................................................ 84 Note 3: Other financial income .................................................................................................................. 84 Note 4: Other financial expenses .............................................................................................................. 84 Note 5: Tax on profit for the year ............................................................................................................... 85 Note 6: Distribution of net profit for the year .......................................................................................... 85 Note 7: Property ........................................................................................................................................... 85 Note 8: Deferred tax..................................................................................................................................... 85 Note 9: Tax receivables ............................................................................................................................... 85 Note 10: Share capital ................................................................................................................................. 85 Note 11: Related parties ............................................................................................................................. 86 Note 12: Commitments .............................................................................................................................. 86 Note 13: Contingent liabilities ................................................................................................................... 86 Note 14: Events after the balance sheet date ......................................................................................... 86 Note 15: Accounting policies ..................................................................................................................... 86

Parent company financial statements ..................... 78 Income statement ............................................................................................................................................. 80 Balance sheet at 31 December ....................................................................................................................... 81 Statement of changes in equity ...................................................................................................................... 82

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

INCOME STATEMENT

Note

Amounts in DKKm

Share of profit in subsidiaries

Staff costs Other external expenses Other income Profit before financial items

Other financial income

Other financial expenses Profit before tax

Tax on profit for the year

Net profit for the year

2017

2016

1,753.4

- 1,777.4

- 33.5 - 20.8

- 6.6 - 18.3

5.1 1,704.2

0.0 - 1,802.3

18.6

8.4

- 10.8

- 2.2

1,712.0

- 1,796.1

- 15.2

23.1

1,696.8

- 1,773.0

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

BALANCE SHEET AT 31 DECEMBER

Assets Note

Equity and Liabilities Amounts in DKKm

2017

2016

Note

Fixed assets 7 1

Property Investments in subsidiaries Total fixed assets

Deferred tax

Tax receivables

2017

2016

2,000.0 0.0

2,000.0 6,195.5

109,257.3 500.0

110,590.8 500.0

111,757.3

119,286.3

Equity 90.4 110,856.7

0.0 119,125.9

110,947.1

119,125.9

36.8

0.0

Share capital Reserve for net revaluation under the equity method Retained earnings etc Proposed dividend

Current assets Receivables from affiliates

Amounts in DKKm

Total equity 2.1

0.8

Short-term debt

56.5

4.5

Debt to banks

0.1

0.0

Other receivables

9.2

2.3

Payables to affiliates

5.5

0.0

Total receivables

104.6

7.6

Trade payables

2.1

2.8

Securities

108.8

137.6

Other payables

11.0

1.5

Cash and bank balances

615.5

19.5

Total short-term debt

18.7

4.3

Total current assets Total assets

828.9

164.7

111,776.0

119,290.6

Total liabilities Total equity and liabilities 11

Related parties

Commitments

Contingent liabilities

Events after the balance sheet date

Accounting policies

18.7

4.3

111,776.0

119,290.6

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

STATEMENT OF CHANGES IN EQUITY

Amounts in DKKm

Share capital

Reserve for net revaluation under the equity method

Retained earnings etc

Proposed dividend

Total

Equity at 1 January 2016

2,000.0

9,451.1

108,669.3

1,000.0

121,120.4

Dividend paid for the year

0.0

- 1,000.0

Net profit/loss for the year

0.0

- 4,370.0

2,097.0

500.0

- 1,773.0

Dividend from subsidiaries

0.0

- 2,592.5

2,592.5

0.0

Other adjustments etc¹

0.0

3,706.9

- 2,768.0

0.0

938.9 119,286.3

Equity at 31 December 2016

2,000.0

6,195.5

110,590.8

500.0

Dividend paid for the year

0.0

- 500.0

Net profit/loss for the year

0.0

1,753.4

- 556.6

500.0

1,696.8

Dividend from subsidiaries

0.0

- 1,296.3

1,296.3

0.0

Other adjustments etc¹

0.0

- 6,652.6

- 2,073.2

0.0

- 8,725.8

2,000.0

0.0

109,257.3

500.0

111,757.3

Equity at 31 December 2017

¹ Other adjustments primarily comprise exchange rate adjustments.

A.P. MØLLER HOLDING A/S ANNUAL ∙ REPORT 2017 2017

NOTES TO PARENT COMPANY FINANCIAL STATEMENTS

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 1: Investments in subsidiaries

Note 2: Staff costs

Amounts in DKKm Cost at 1 January Additions Disposals Cost at 31 December Adjustment to carrying amount at 1 January Share of profit for the year Dividend Disposals

2017

2016

112,930.4

111,120.1

0.0 - 0.5

3,325.5 - 1,515.2

112,929.9

112,930.4

6,195.5

9,451.1

1,753.4 - 1,296.3

- 1,777.4 - 2,592.5

0.0

- 271.2

Other adjustments

- 8,725.8

1,385.5

Adjustment to carrying amount at 31 December

- 2,073.2

6,195.5

110,856.7

119,125.9

Carrying amount at 31 December

Amounts in DKKm

2017

2016

32.6

6.4

0.9 0.0

0.2 0.0

Total

33.5

6.6

Average number of employees Remuneration to the Executive Board

12 15.5

3 4.2

1.0

0.8

Wages and salaries Pensions Other social security costs

Remuneration to the Board of Directors

A.P. Møller Holding A/S has introduced a cash-settled incentive plan to members of the Executive Board. The incentive plan provides an annual bonus and a three-year bonus programme, which depends on the development of the company’s investments. Bonus is included in Remuneration to the Executive Board with DKK 5.8m (DKK 0.5m).

Company overview as at 31 December 2017

Note 3: Other financial income

Subsidiaries

Country of incorpora- Ownership tion share

A.P. Møller - Mærsk A/S

Denmark

41.5%

51.2%

APMH Invest A/S

Denmark

100.0%

Voting share

Please refer to the company overview for A.P. Moller Holding’s group of companies as stated in note 25, which is an integrated part of this note.

Amounts in DKKm

2017

2016

Interest income

2.0

0.0

Dividends Exchange rate gains

3.3 9.4

5.9 0.0

Gains on securities Other financial income

3.1 0.8

1.8 0.7

18.6

8.4

Total

Note 4: Other financial expenses Amounts in DKKm

2017

2016

Interest expenses

2.1

1.7

Exchange rate losses

8.7

0.0

0.0 10.8

0.5 2.2

Losses on securities Total

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 5: Tax on profit for the year Amounts in DKKm

Note 8: Deferred tax 2017

2016

Tax on profit for the year

- 5.7

- 3.2

Adjustment of tax concerning previous years Adjustment of deferred tax

22.2 - 1.3

- 21.3 1.4

Total

15.2

- 23.1

Amounts in DKKm

2017

2016

Deferred tax asset at 1 January

0.8

2.2

Adjustment of deferred tax for the year Deferred tax asset at 31 December

1.3 2.1

- 1.4 0.8

Deferred tax is calculated based on the difference between the carrying amount and the tax base of assets and liabilities. Management expects the deferred tax asset to be utilised by the Company itself or by the group of jointly taxed companies within a few years.

Note 6: Distribution of net profit for the year Amounts in DKKm

2017

2016

Proposed dividend Reserve for net revaluation under the equity method

500.0 1,753.4

500.0 - 4,370.0

Note 9: Tax receivables

Retained earnings Net profit for the year

- 556.6 1,696.8

2,097.0 - 1,773.0

Amounts in DKKm

Note 7: Property Amounts in DKKm

2017

2016

0.0

Additions

90.4

0.0

Disposals

0.0

90.4

0,0

Depreciation at 1 January Depreciation for the year

0.0 0.0

Depreciation at 31 December

0,0

90.4

0.0

Cost at 1 January

Cost at 31 December

Carrying amount at 31 December

The property has been acquired as at 31 December 2017.

2017

2016

4.5 - 22.2

- 45.3 21.3

Tax on profit for the year Tax paid for the year

5.7 68.5

3.2 25.3

Tax receivables at 31 December

56.5

4.5

Tax receivables at 1 January Adjustment of tax concerning previous years

Note 10: Share capital Amounts in DKKm Changes in share capital in the past 5 years On formation at 20 December 2013

999.0

Cash capital increase at 20 December 2013 Capital increase through non-cash contribution at 2 March 2015

1.0 1,000.0

Share capital at 31 December 2017

2,000.0

The share capital consists of 2,000 shares with a nominal value of DKK 1m.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 11: Related parties

Note 14: Events after the balance sheet date

A.P. Møller og Hustru Chastine Mc-Kinney Møllers Fond til almene Formaal (A.P. Moller Foundation) holds 100% of the Company’s capital.

No events of importance to the Annual Report have occurred during the period from the balance sheet date until the presentation of the financial statements.

Related parties exercising controlling interest on the Company: • A.P. Moller Foundation, Esplanaden 50, Copenhagen, Denmark.

Note 15: Accounting policies The Company has not entered into any transactions with related parties that were not on an arm’s length basis.

Note 12: Commitments

A few adjustments have been made to the presentation form and designations in view of the nature of the Company. The adjustments have no effect on either profit or equity.

As part of the Company’s activities, lease agreements are entered into regarding operating lease of equipment and office buildings, etc. The future charter and operating lease payments for the operations are: Amounts in DKKm Within one year Between one and five years

The Financial Statement for 2017 for A.P. Møller Holding A/S has been prepared on a going concern basis and in accordance with the provisions of the Danish Financial Statements Act applying to large enterprises of reporting class C.

2017

2016

1.4 0.5

0.0 0.0

After five years

0.0

Total

1.9

0.0

Note 13: Contingent liabilities

With reference to section 86(4) of the Danish Financial Statements Act, no cash flow statement has been prepared for the Parent Company. Compared to the accounting policies described for A.P. Møller Holding A/S as stated in note 23 to the consolidated financial statements – the Company’s accounting policies differ mainly in the following areas: •

• •

The Company is included in national joint taxation with other Danish companies in the A.P. Møller Holding group of companies. The Company is jointly and severally liable for the payment of taxes and withholding tax.

•

Shares in subsidiaries are measured under the equity method. The share of profit/loss after tax in the subsidiaries is recognised as a separate line item in the income statement, see below. Goodwill and other intangible assets with indefinite useful lives are recognised as part of the investment and amortised over a maximum of 10 years. Dividends from subsidiaries are recognised as a receivable at the time of declaration. All equity instruments where A.P. Møller Holding A/S does not have either control, joint control or significant influence is measured at fair value and the fair value adjustment is recognised in the income statement. Therefore equity instruments classified at fair value through other comprehensive income in the consolidated financial statement including the 19% shareholding in Dansk Supermarked is measured at fair value and the value adjustment is recognised in the income statement. The effect of the ‘expected credit loss’ model used in the consolidated financial statement due to the implementation of IFRS 9 has been reversed in the financial statement of A.P. Møller Holding A/S and the ‘incurred loss’ model has been applied. This primarily has an effect on the credit losses in the associated company Danske Bank.

The Financial Statements are presented in DKK million.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

Note 15: Accounting policies - continued Investment in subsidiaries Investment in subsidiaries are accounted for under the equity method. The investments are initially recognised at cost and adjusted thereafter to recognise the company’s share of the post-acquisition profits or losses of the subsidiary in profit or loss, and the company’s share of movements in equity of the subsidiary. Dividends received or receivable from subsidiaries are recognised as a reduction in the carrying amount of the investment. When the company’s share of losses in a subsidiary equals or exceeds its investment in the entity, including any other unsecured long-term receivables, the company does not recognise further losses, unless it has incurred obligations or made payments on behalf of the subsidiary. Unrealised gains on transactions between the company and its subsidiaries are eliminated in full. Accounting policies of equity accounted subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the company. Securities All other equity instruments where APMH Invest A/S does not have either control, joint control or significant influence is measured at fair value and the fair value adjustment is recognised in the income statement under financial items. Fair value of shares, bonds, etc, are recognised on the trade date at fair value and are subsequently measured at market price as regards listed securities and at an estimated fair value as regards other equity investments.

A.P. MØLLER HOLDING A/S ANNUAL ∙ REPORT 2017 2017

REPORTS

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

MANAGEMENT’S STATEMENT

In our opinion, Management’s Review includes a true and fair account of the development in the operations and financial circumstances of the Group and the Parent Company, of the results for the year and of the financial position of the Group and the Parent Company. We recommend that the Annual Report be adopted at the Annual General Meeting.

Copenhagen, 24 April 2018

Executive Board

Robert Mærsk Uggla

Martin Nørkjær Larsen

Board of Directors

The Executive Board and the Board of Directors have today considered and adopted the Annual Report of A.P. Møller Holding A/S for the financial year 1 January – 31 December 2017.

Ane Mærsk Mc-Kinney Uggla Chairman

Peter Straarup

Jan Leschly

Lars-Erik Brenøe

The Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU and further requirements in the Danish Financial Statements Act, and the Parent Company Financial Statements have been prepared in accordance with the Danish Financial Statements Act. Management’s Review has been prepared in accordance with the Danish Financial Statements Act. In our opinion, the Consolidated Financial Statements and the Parent Company Financial Statements give a true and fair view of the financial position at 31 December 2017 of the Group and the Parent Company and of the results of the Group and Parent Company operations and consolidated cash flows for 2017.

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

INDEPENDENT AUDITOR’S REPORT To the shareholder of A.P. Møller Holding A/S

comprise income statement, balance sheet, statement of changes in equity and notes, including a summary of significant accounting policies, for both the Group and the Parent Company, as well as statement of comprehensive income and cash flow statement for the Group (“financial statements”). Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs) and the additional requirements applicable in Denmark. Our responsibilities under those standards and requirements are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) and the additional requirements applicable in Denmark, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Statement on Management’s Review Management is responsible for Management’s Review. Our opinion on the financial statements does not cover Management’s Review, and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read Management’s Review and, in doing so, consider whether Management’s Review is materially inconsistent with the financial statements or our knowledge obtained during the audit, or otherwise appears to be materially misstated.

Opinion In our opinion, the Consolidated Financial Statements give a true and fair view of the Group’s financial position at 31 December 2017 and of the results of the Group’s operations and cash flows for the financial year 1 January to 31 December 2017 in accordance with International Financial Reporting Standards as adopted by the EU and further requirements in the Danish Financial Statements Act. Moreover, in our opinion, the Parent Company Financial Statements give a true and fair view of the Parent Company’s financial position at 31 December 2017 and of the results of the Parent Company’s operations for the financial year 1 January to 31 December 2017 in accordance with the Danish Financial Statements Act. We have audited the Consolidated Financial Statements and the Parent Company Financial Statements of A.P. Møller Holding A/S for the financial year 1 January - 31 December 2017, which

Moreover, it is our responsibility to consider whether Management’s Review provides the information required under the Danish Financial Statements Act. Based on the work we have performed, in our view, Management’s Review is in accordance with the Consolidated Financial Statements and the Parent Company Financial Statements and has been prepared in accordance with the requirements of the Danish Financial Statements Act. We did not identify any material misstatement in Management’s Review. Management’s responsibilities for the Financial Statements Management is responsible for the preparation of Consolidated Financial Statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the EU and further requirements in the Danish Financial Statements Act and for the preparation of Parent Company Financial Statements that give a true and fair view in accordance with the Danish Financial Statements Act, and for such internal control as Management determines is necessary to

A.P. MØLLER HOLDING A/S

ANNUAL ∙ REPORT 2017

•

Conclude on the appropriateness of Management’s use of the going concern basis of accounting in preparing the Financial Statements and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

Auditor’s responsibilities for the audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

•

Evaluate the overall presentation, structure and contents of the Financial Statements, including the disclosures, and whether the Financial Statements represent the underlying transactions and events in a manner that gives a true and fair view.

•

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the Consolidated Financial Statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

As part of an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

•

Identify and assess the risks of material misstatement of the Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Copenhagen, 24 April 2018

•

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

Mogens Nørgaard Mogensen State Authorised Public Accountant MNE-number 21404

•

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management.

enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, Management is responsible for assessing the Group’s and the Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting in preparing the financial statements unless Management either intends to liquidate the Group or the Parent Company or to cease operations, or has no realistic alternative but to do so.

PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab CVR No 33 77 12 31

Thomas Wraae Holm State Authorised Public Accountant MNE-number 30141

A.P. MOLLER HOLDING - ANNUAL REPORT 2017

Articles inside

Danske Bank A/S

Independent Auditor’s Report

Corporate Social Responsibility

A.P. Møller Capital P/S

Our strategic beliefs

Parent company financial statements

Risk management

Maersk Tankers A/S

Letter from the CEO